Correlation Between Caterpillar and GCM Mining
Can any of the company-specific risk be diversified away by investing in both Caterpillar and GCM Mining 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 GCM Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Caterpillar and GCM Mining Corp, you can compare the effects of market volatilities on Caterpillar and GCM Mining 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 GCM Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caterpillar and GCM Mining.
Diversification Opportunities for Caterpillar and GCM Mining
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Caterpillar and GCM is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Caterpillar and GCM Mining Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GCM Mining 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 GCM Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GCM Mining Corp has no effect on the direction of Caterpillar i.e., Caterpillar and GCM Mining go up and down completely randomly.
Pair Corralation between Caterpillar and GCM Mining
Considering the 90-day investment horizon Caterpillar is expected to generate 0.59 times more return on investment than GCM Mining. However, Caterpillar is 1.7 times less risky than GCM Mining. It trades about 0.06 of its potential returns per unit of risk. GCM Mining Corp is currently generating about -0.07 per unit of risk. If you would invest 24,328 in Caterpillar on October 22, 2024 and sell it today you would earn a total of 14,274 from holding Caterpillar or generate 58.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 24.19% |
| Values | Daily Returns |
Caterpillar vs. GCM Mining Corp
Performance |
| Timeline |
| Caterpillar |
| GCM Mining Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Caterpillar and GCM Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caterpillar and GCM Mining
The main advantage of trading using opposite Caterpillar and GCM Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caterpillar position performs unexpectedly, GCM Mining 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 GCM Mining will offset losses from the drop in GCM Mining's long position.| Caterpillar vs. AGCO Corporation | Caterpillar vs. Lindsay | Caterpillar vs. Alamo Group | Caterpillar vs. Oshkosh |
| GCM Mining vs. Silver Tiger Metals | GCM Mining vs. Defiance Silver Corp | GCM Mining vs. Summa Silver Corp | GCM Mining vs. AbraSilver Resource Corp |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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