Correlation Between SPDR DoubleLine and Caterpillar
Can any of the company-specific risk be diversified away by investing in both SPDR DoubleLine 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 SPDR DoubleLine and Caterpillar into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPDR DoubleLine Short and Caterpillar, you can compare the effects of market volatilities on SPDR DoubleLine 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 SPDR DoubleLine with a short position of Caterpillar. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR DoubleLine and Caterpillar.
Diversification Opportunities for SPDR DoubleLine and Caterpillar
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between SPDR and Caterpillar is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding SPDR DoubleLine Short and Caterpillar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caterpillar and SPDR DoubleLine 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 SPDR DoubleLine Short 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 SPDR DoubleLine i.e., SPDR DoubleLine and Caterpillar go up and down completely randomly.
Pair Corralation between SPDR DoubleLine and Caterpillar
Given the investment horizon of 90 days SPDR DoubleLine is expected to generate 18.14 times less return on investment than Caterpillar. But when comparing it to its historical volatility, SPDR DoubleLine Short is 15.61 times less risky than Caterpillar. It trades about 0.4 of its potential returns per unit of risk. Caterpillar is currently generating about 0.46 of returns per unit of risk over similar time horizon. If you would invest 32,763 in Caterpillar on December 29, 2023 and sell it today you would earn a total of 3,880 from holding Caterpillar or generate 11.84% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 95.65% |
Values | Daily Returns |
SPDR DoubleLine Short vs. Caterpillar
Performance |
Timeline |
SPDR DoubleLine Short |
Caterpillar |
SPDR DoubleLine and Caterpillar Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with SPDR DoubleLine and Caterpillar
The main advantage of trading using opposite SPDR DoubleLine and Caterpillar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR DoubleLine 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.SPDR DoubleLine vs. VanEck Vectors Moodys | SPDR DoubleLine vs. Xtrackers California Municipal | SPDR DoubleLine vs. Principal Exchange Traded Funds | SPDR DoubleLine vs. Vanguard ESG US |
Caterpillar vs. Deere Company | Caterpillar vs. Titan International | Caterpillar vs. Hyster Yale Materials Handling | Caterpillar vs. Gencor Industries |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
Other Complementary Tools
Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
Equity Valuation Check real value of public entities based on technical and fundamental data | |
Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
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 | |
Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio |