Correlation Between Caterpillar and Nuveen Municipal
Can any of the company-specific risk be diversified away by investing in both Caterpillar and Nuveen Municipal 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 Nuveen Municipal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Caterpillar and Nuveen Municipal High, you can compare the effects of market volatilities on Caterpillar and Nuveen Municipal 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 Nuveen Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caterpillar and Nuveen Municipal.
Diversification Opportunities for Caterpillar and Nuveen Municipal
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Caterpillar and Nuveen is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Caterpillar and Nuveen Municipal High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuveen Municipal High 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 Nuveen Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuveen Municipal High has no effect on the direction of Caterpillar i.e., Caterpillar and Nuveen Municipal go up and down completely randomly.
Pair Corralation between Caterpillar and Nuveen Municipal
Considering the 90-day investment horizon Caterpillar is expected to generate 3.99 times more return on investment than Nuveen Municipal. However, Caterpillar is 3.99 times more volatile than Nuveen Municipal High. It trades about 0.14 of its potential returns per unit of risk. Nuveen Municipal High is currently generating about 0.15 per unit of risk. If you would invest 37,652 in Caterpillar on September 4, 2024 and sell it today you would earn a total of 2,599 from holding Caterpillar or generate 6.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Caterpillar vs. Nuveen Municipal High
Performance |
| Timeline |
| Caterpillar |
| Nuveen Municipal High |
Caterpillar and Nuveen Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caterpillar and Nuveen Municipal
The main advantage of trading using opposite Caterpillar and Nuveen Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caterpillar position performs unexpectedly, Nuveen Municipal 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 Nuveen Municipal will offset losses from the drop in Nuveen Municipal's long position.| Caterpillar vs. AGCO Corporation | Caterpillar vs. Deere Company | Caterpillar vs. Lindsay | Caterpillar vs. Lion Electric Corp |
| Nuveen Municipal vs. T Rowe Price | Nuveen Municipal vs. Artisan High Income | Nuveen Municipal vs. Ppm High Yield | Nuveen Municipal vs. Lord Abbett High |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
Other Complementary Tools
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio |