Correlation Between Barclays Capital and Caterpillar
Can any of the company-specific risk be diversified away by investing in both Barclays Capital 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 Barclays Capital and Caterpillar into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Barclays Capital and Caterpillar, you can compare the effects of market volatilities on Barclays Capital 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 Barclays Capital with a short position of Caterpillar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barclays Capital and Caterpillar.
Diversification Opportunities for Barclays Capital and Caterpillar
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Barclays and Caterpillar is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Barclays Capital and Caterpillar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caterpillar and Barclays Capital 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 Barclays Capital 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 Barclays Capital i.e., Barclays Capital and Caterpillar go up and down completely randomly.
Pair Corralation between Barclays Capital and Caterpillar
If you would invest 35,390 in Caterpillar on January 19, 2024 and sell it today you would earn a total of 442.00 from holding Caterpillar or generate 1.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 4.55% |
| Values | Daily Returns |
Barclays Capital vs. Caterpillar
Performance |
| Timeline |
| Barclays Capital |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Caterpillar |
Barclays Capital and Caterpillar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barclays Capital and Caterpillar
The main advantage of trading using opposite Barclays Capital and Caterpillar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barclays Capital 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.| Barclays Capital vs. First Trust Global | Barclays Capital vs. UBS AG London | Barclays Capital vs. abrdn Bloomberg All |
| Caterpillar vs. AGCO Corporation | Caterpillar vs. CNH Industrial NV | Caterpillar vs. NikolaCorp | Caterpillar vs. PACCAR Inc |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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