Correlation Between CAT Strategic and Dow Jones
Can any of the company-specific risk be diversified away by investing in both CAT Strategic and Dow Jones 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 CAT Strategic and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CAT Strategic Metals and Dow Jones Industrial, you can compare the effects of market volatilities on CAT Strategic and Dow Jones 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 CAT Strategic with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of CAT Strategic and Dow Jones.
Diversification Opportunities for CAT Strategic and Dow Jones
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between CAT and Dow is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding CAT Strategic Metals and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial and CAT Strategic 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 CAT Strategic Metals are associated (or correlated) with Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of CAT Strategic i.e., CAT Strategic and Dow Jones go up and down completely randomly.
Pair Corralation between CAT Strategic and Dow Jones
Assuming the 90 days horizon CAT Strategic Metals is expected to generate 44.73 times more return on investment than Dow Jones. However, CAT Strategic is 44.73 times more volatile than Dow Jones Industrial. It trades about 0.1 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.16 per unit of risk. If you would invest 1.10 in CAT Strategic Metals on August 25, 2024 and sell it today you would lose (0.70) from holding CAT Strategic Metals or give up 63.64% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.63% |
| Values | Daily Returns |
CAT Strategic Metals vs. Dow Jones Industrial
Performance |
| Timeline |
CAT Strategic and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
CAT Strategic Metals
Pair trading matchups for CAT Strategic
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with CAT Strategic and Dow Jones
The main advantage of trading using opposite CAT Strategic and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CAT Strategic position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| CAT Strategic vs. Glen Eagle Resources | CAT Strategic vs. Grizzly Discoveries | CAT Strategic vs. Silver Dollar Resources | CAT Strategic vs. Defense Metals Corp |
| Dow Jones vs. Vistra Energy Corp | Dow Jones vs. Fluence Energy | Dow Jones vs. Old Republic International | Dow Jones vs. Empresa Distribuidora y |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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