Correlation Between Caterpillar and Voltage Metals
Can any of the company-specific risk be diversified away by investing in both Caterpillar and Voltage Metals 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 Voltage Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Caterpillar and Voltage Metals Corp, you can compare the effects of market volatilities on Caterpillar and Voltage Metals 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 Voltage Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caterpillar and Voltage Metals.
Diversification Opportunities for Caterpillar and Voltage Metals
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Caterpillar and Voltage is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Caterpillar and Voltage Metals Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Voltage Metals 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 Voltage Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Voltage Metals Corp has no effect on the direction of Caterpillar i.e., Caterpillar and Voltage Metals go up and down completely randomly.
Pair Corralation between Caterpillar and Voltage Metals
Considering the 90-day investment horizon Caterpillar is expected to generate 5.06 times less return on investment than Voltage Metals. But when comparing it to its historical volatility, Caterpillar is 4.78 times less risky than Voltage Metals. It trades about 0.04 of its potential returns per unit of risk. Voltage Metals Corp is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 3.29 in Voltage Metals Corp on September 3, 2024 and sell it today you would earn a total of 0.71 from holding Voltage Metals Corp or generate 21.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Caterpillar vs. Voltage Metals Corp
Performance |
| Timeline |
| Caterpillar |
| Voltage Metals Corp |
Caterpillar and Voltage Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caterpillar and Voltage Metals
The main advantage of trading using opposite Caterpillar and Voltage Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caterpillar position performs unexpectedly, Voltage Metals 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 Voltage Metals will offset losses from the drop in Voltage Metals' long position.| Caterpillar vs. Partner Communications | Caterpillar vs. Merck Company | Caterpillar vs. Western Midstream Partners | Caterpillar vs. Edgewise Therapeutics |
| Voltage Metals vs. Norra Metals Corp | Voltage Metals vs. E79 Resources Corp | Voltage Metals vs. Cantex Mine Development | Voltage Metals vs. Amarc Resources |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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