Correlation Between GreenPower and Caterpillar
Can any of the company-specific risk be diversified away by investing in both GreenPower and Caterpillar 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 GreenPower and Caterpillar into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GreenPower Motor and Caterpillar, you can compare the effects of market volatilities on GreenPower 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 GreenPower with a short position of Caterpillar. Check out your portfolio center. Please also check ongoing floating volatility patterns of GreenPower and Caterpillar.
Diversification Opportunities for GreenPower and Caterpillar
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between GreenPower and Caterpillar is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding GreenPower Motor and Caterpillar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caterpillar and GreenPower 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 GreenPower Motor 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 has no effect on the direction of GreenPower i.e., GreenPower and Caterpillar go up and down completely randomly.
Pair Corralation between GreenPower and Caterpillar
Allowing for the 90-day total investment horizon GreenPower Motor is expected to under-perform the Caterpillar. In addition to that, GreenPower is 3.25 times more volatile than Caterpillar. It trades about -0.02 of its total potential returns per unit of risk. Caterpillar is currently generating about 0.05 per unit of volatility. If you would invest 24,488 in Caterpillar on October 13, 2024 and sell it today you would earn a total of 10,612 from holding Caterpillar or generate 43.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
GreenPower Motor vs. Caterpillar
Performance |
| Timeline |
| GreenPower Motor |
| Caterpillar |
GreenPower and Caterpillar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GreenPower and Caterpillar
The main advantage of trading using opposite GreenPower and Caterpillar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GreenPower 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.| GreenPower vs. Phoenix Motor Common | GreenPower vs. Envirotech Vehicles | GreenPower vs. Volcon Inc | GreenPower vs. Zapp Electric Vehicles |
| Caterpillar vs. Deere Company | Caterpillar vs. GreenPower Motor | Caterpillar vs. Hyster Yale Materials Handling | Caterpillar vs. CEA Industries Warrant |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
Other Complementary Tools
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Bonds Directory Find actively traded corporate debentures issued by US companies |