Correlation Between Caterpillar and Goldman Sachs

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Caterpillar and Goldman Sachs 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 Goldman Sachs into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Caterpillar and Goldman Sachs Group, you can compare the effects of market volatilities on Caterpillar and Goldman Sachs 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 Goldman Sachs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caterpillar and Goldman Sachs.

Diversification Opportunities for Caterpillar and Goldman Sachs

0.88
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Caterpillar and Goldman is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Caterpillar and Goldman Sachs Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs Group 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 Goldman Sachs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Goldman Sachs Group has no effect on the direction of Caterpillar i.e., Caterpillar and Goldman Sachs go up and down completely randomly.

Pair Corralation between Caterpillar and Goldman Sachs

Considering the 90-day investment horizon Caterpillar is expected to generate 1.2 times more return on investment than Goldman Sachs. However, Caterpillar is 1.2 times more volatile than Goldman Sachs Group. It trades about -0.1 of its potential returns per unit of risk. Goldman Sachs Group is currently generating about -0.21 per unit of risk. If you would invest  18,066  in Caterpillar on July 5, 2022 and sell it today you would lose (943.00)  from holding Caterpillar or give up 5.22% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Caterpillar  vs.  Goldman Sachs Group

 Performance (%) 
       Timeline  
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 comparatively stable basic indicators, Caterpillar is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Caterpillar Price Channel

Goldman Sachs Group 
Goldman Performance
1 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Goldman Sachs Group are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Goldman Sachs is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Goldman Price Channel

Caterpillar and Goldman Sachs Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Caterpillar and Goldman Sachs

The main advantage of trading using opposite Caterpillar and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caterpillar position performs unexpectedly, Goldman Sachs 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 Goldman Sachs will offset losses from the drop in Goldman Sachs' long position.
Caterpillar vs. Amazon Inc
The idea behind Caterpillar and Goldman Sachs Group 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.
Goldman Sachs vs. Amazon 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 Probability Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.

Other Complementary Tools

Portfolio Comparator
Compare the composition, asset allocations and performance of any two portfolios in your account
Go
Bond Directory
Find actively traded corporate debentures issued by US companies
Go
Portfolio Volatility
Check portfolio volatility and analyze historical return density to properly model market risk
Go
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
Go
Stock Screener
Find equities using custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook.
Go
My Watchlist Analysis
Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like
Go