Correlation Between Caterpillar and SVB T
Can any of the company-specific risk be diversified away by investing in both Caterpillar and SVB T at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Caterpillar and SVB T into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Caterpillar and SVB T Corp, you can compare the effects of market volatilities on Caterpillar and SVB T and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Caterpillar with a short position of SVB T. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caterpillar and SVB T.
Diversification Opportunities for Caterpillar and SVB T
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Caterpillar and SVB is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Caterpillar and SVB T Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SVB T Corp and Caterpillar is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Caterpillar are associated (or correlated) with SVB T. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SVB T Corp has no effect on the direction of Caterpillar i.e., Caterpillar and SVB T go up and down completely randomly.
Pair Corralation between Caterpillar and SVB T
Considering the 90-day investment horizon Caterpillar is expected to under-perform the SVB T. In addition to that, Caterpillar is 2.23 times more volatile than SVB T Corp. It trades about -0.38 of its total potential returns per unit of risk. SVB T Corp is currently generating about 0.13 per unit of volatility. If you would invest 4,250 in SVB T Corp on October 13, 2024 and sell it today you would earn a total of 50.00 from holding SVB T Corp or generate 1.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Caterpillar vs. SVB T Corp
Performance |
| Timeline |
| Caterpillar |
| SVB T Corp |
Caterpillar and SVB T Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caterpillar and SVB T
The main advantage of trading using opposite Caterpillar and SVB T positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caterpillar position performs unexpectedly, SVB T can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in SVB T will offset losses from the drop in SVB T's long position.| Caterpillar vs. Deere Company | Caterpillar vs. GreenPower Motor | Caterpillar vs. Hyster Yale Materials Handling | Caterpillar vs. CEA Industries Warrant |
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Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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