Correlation Between Atlas Crest and Caterpillar

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Can any of the company-specific risk be diversified away by investing in both Atlas Crest 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 Atlas Crest and Caterpillar into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Atlas Crest Investment and Caterpillar, you can compare the effects of market volatilities on Atlas Crest 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 Atlas Crest with a short position of Caterpillar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Atlas Crest and Caterpillar.

Diversification Opportunities for Atlas Crest and Caterpillar

0.39
  Correlation Coefficient

Weak diversification

The 3 months correlation between Atlas and Caterpillar is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Atlas Crest Investment and Caterpillar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caterpillar and Atlas Crest 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 Atlas Crest Investment 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 Atlas Crest i.e., Atlas Crest and Caterpillar go up and down completely randomly.

Pair Corralation between Atlas Crest and Caterpillar

Given the investment horizon of 90 days Atlas Crest Investment is expected to generate 0.06 times more return on investment than Caterpillar. However, Atlas Crest Investment is 16.43 times less risky than Caterpillar. It trades about 0.08 of its potential returns per unit of risk. Caterpillar is currently generating about -0.44 per unit of risk. If you would invest  984.00  in Atlas Crest Investment on June 26, 2022 and sell it today you would earn a total of  2.00  from holding Atlas Crest Investment or generate 0.2% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Atlas Crest Investment  vs.  Caterpillar

 Performance (%) 
       Timeline  
Atlas Crest Investment 
Atlas Performance
5 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Atlas Crest Investment are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable forward indicators, Atlas Crest is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Atlas Price Channel

Caterpillar 
Caterpillar Performance
0 of 100
Over the last 90 days Caterpillar has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Caterpillar Price Channel

Atlas Crest and Caterpillar Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Atlas Crest and Caterpillar

The main advantage of trading using opposite Atlas Crest and Caterpillar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Atlas Crest 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.
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The idea behind Atlas Crest Investment and Caterpillar pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 ETF Directory module to find actively traded Exchange Traded Funds (ETF) from around the world.

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