Correlation Between Caterpillar and Saat Servative
Can any of the company-specific risk be diversified away by investing in both Caterpillar and Saat Servative 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 Caterpillar and Saat Servative into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Caterpillar and Saat Servative Strategy, you can compare the effects of market volatilities on Caterpillar and Saat Servative 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 Caterpillar with a short position of Saat Servative. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caterpillar and Saat Servative.
Diversification Opportunities for Caterpillar and Saat Servative
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Caterpillar and Saat is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Caterpillar and Saat Servative Strategy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Saat Servative Strategy and Caterpillar 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 Caterpillar are associated (or correlated) with Saat Servative. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Saat Servative Strategy has no effect on the direction of Caterpillar i.e., Caterpillar and Saat Servative go up and down completely randomly.
Pair Corralation between Caterpillar and Saat Servative
Considering the 90-day investment horizon Caterpillar is expected to generate 4.64 times more return on investment than Saat Servative. However, Caterpillar is 4.64 times more volatile than Saat Servative Strategy. It trades about 0.1 of its potential returns per unit of risk. Saat Servative Strategy is currently generating about -0.11 per unit of risk. If you would invest 35,466 in Caterpillar on January 25, 2024 and sell it today you would earn a total of 905.00 from holding Caterpillar or generate 2.55% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Caterpillar vs. Saat Servative Strategy
Performance |
Timeline |
Caterpillar |
Saat Servative Strategy |
Caterpillar and Saat Servative Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Caterpillar and Saat Servative
The main advantage of trading using opposite Caterpillar and Saat Servative positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caterpillar position performs unexpectedly, Saat Servative 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 Saat Servative will offset losses from the drop in Saat Servative's long position.Caterpillar vs. NikolaCorp | Caterpillar vs. Ideanomics | Caterpillar vs. Lion Electric Corp | Caterpillar vs. Wabash National |
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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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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