Correlation Between Disney and CATERPILLAR
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By analyzing existing cross correlation between Walt Disney and CATERPILLAR FINANCIAL SERVICES, you can compare the effects of market volatilities on Disney and CATERPILLAR 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 Disney with a short position of CATERPILLAR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Disney and CATERPILLAR.
Diversification Opportunities for Disney and CATERPILLAR
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Disney and CATERPILLAR is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Walt Disney and CATERPILLAR FINANCIAL SERVICES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CATERPILLAR FINANCIAL and Disney 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 Walt Disney are associated (or correlated) with CATERPILLAR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CATERPILLAR FINANCIAL has no effect on the direction of Disney i.e., Disney and CATERPILLAR go up and down completely randomly.
Pair Corralation between Disney and CATERPILLAR
Considering the 90-day investment horizon Walt Disney is expected to generate 6.05 times more return on investment than CATERPILLAR. However, Disney is 6.05 times more volatile than CATERPILLAR FINANCIAL SERVICES. It trades about 0.08 of its potential returns per unit of risk. CATERPILLAR FINANCIAL SERVICES is currently generating about 0.03 per unit of risk. If you would invest 8,432 in Walt Disney on September 4, 2024 and sell it today you would earn a total of 3,284 from holding Walt Disney or generate 38.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.17% |
| Values | Daily Returns |
Walt Disney vs. CATERPILLAR FINANCIAL SERVICES
Performance |
| Timeline |
| Walt Disney |
| CATERPILLAR FINANCIAL |
Disney and CATERPILLAR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Disney and CATERPILLAR
The main advantage of trading using opposite Disney and CATERPILLAR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Disney position performs unexpectedly, CATERPILLAR 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 CATERPILLAR will offset losses from the drop in CATERPILLAR's long position.| Disney vs. Roku Inc | Disney vs. AMC Entertainment Holdings | Disney vs. Paramount Global Class | Disney vs. Warner Bros Discovery |
| CATERPILLAR vs. Southwest Gas Holdings | CATERPILLAR vs. Algoma Steel Group | CATERPILLAR vs. Allegheny Technologies Incorporated | CATERPILLAR vs. NRG Energy |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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