Correlation Between Caterpillar and TILT Holdings
Can any of the company-specific risk be diversified away by investing in both Caterpillar and TILT Holdings 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 TILT Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Caterpillar and TILT Holdings, you can compare the effects of market volatilities on Caterpillar and TILT Holdings 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 TILT Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caterpillar and TILT Holdings.
Diversification Opportunities for Caterpillar and TILT Holdings
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Caterpillar and TILT is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Caterpillar and TILT Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TILT Holdings 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 TILT Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TILT Holdings has no effect on the direction of Caterpillar i.e., Caterpillar and TILT Holdings go up and down completely randomly.
Pair Corralation between Caterpillar and TILT Holdings
Considering the 90-day investment horizon Caterpillar is expected to generate 0.18 times more return on investment than TILT Holdings. However, Caterpillar is 5.53 times less risky than TILT Holdings. It trades about 0.08 of its potential returns per unit of risk. TILT Holdings is currently generating about 0.0 per unit of risk. If you would invest 22,084 in Caterpillar on August 28, 2024 and sell it today you would earn a total of 18,699 from holding Caterpillar or generate 84.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Caterpillar vs. TILT Holdings
Performance |
| Timeline |
| Caterpillar |
| TILT Holdings |
Caterpillar and TILT Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caterpillar and TILT Holdings
The main advantage of trading using opposite Caterpillar and TILT Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caterpillar position performs unexpectedly, TILT Holdings 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 TILT Holdings will offset losses from the drop in TILT Holdings' long position.| Caterpillar vs. Lion Electric Corp | Caterpillar vs. Xos Inc | Caterpillar vs. Hydrofarm Holdings Group | Caterpillar vs. AGCO Corporation |
| TILT Holdings vs. Cansortium | TILT Holdings vs. 4Front Ventures Corp | TILT Holdings vs. Medipharm Labs Corp | TILT Holdings vs. Khiron Life Sciences |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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