Correlation Between Snowline Gold and Caterpillar
Can any of the company-specific risk be diversified away by investing in both Snowline Gold 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 Snowline Gold and Caterpillar into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Snowline Gold Corp and Caterpillar, you can compare the effects of market volatilities on Snowline Gold 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 Snowline Gold with a short position of Caterpillar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Snowline Gold and Caterpillar.
Diversification Opportunities for Snowline Gold and Caterpillar
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Snowline and Caterpillar is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Snowline Gold Corp and Caterpillar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caterpillar and Snowline Gold 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 Snowline Gold Corp 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 Snowline Gold i.e., Snowline Gold and Caterpillar go up and down completely randomly.
Pair Corralation between Snowline Gold and Caterpillar
Assuming the 90 days horizon Snowline Gold Corp is expected to generate 1.46 times more return on investment than Caterpillar. However, Snowline Gold is 1.46 times more volatile than Caterpillar. It trades about 0.06 of its potential returns per unit of risk. Caterpillar is currently generating about -0.01 per unit of risk. If you would invest 374.00 in Snowline Gold Corp on November 28, 2024 and sell it today you would earn a total of 67.00 from holding Snowline Gold Corp or generate 17.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Snowline Gold Corp vs. Caterpillar
Performance |
| Timeline |
| Snowline Gold Corp |
| Caterpillar |
Snowline Gold and Caterpillar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Snowline Gold and Caterpillar
The main advantage of trading using opposite Snowline Gold and Caterpillar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Snowline Gold 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.| Snowline Gold vs. Heliostar Metals | Snowline Gold vs. Independence Gold Corp | Snowline Gold vs. Westward Gold | Snowline Gold vs. Cabral Gold |
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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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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