Correlation Between Brera Holdings and Caterpillar

Can any of the company-specific risk be diversified away by investing in both Brera Holdings 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 Brera Holdings and Caterpillar into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Brera Holdings PLC and Caterpillar, you can compare the effects of market volatilities on Brera Holdings 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 Brera Holdings with a short position of Caterpillar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brera Holdings and Caterpillar.

Diversification Opportunities for Brera Holdings and Caterpillar

0.08

Correlation Coefficient

Brera Holdings  Caterpillar

Significant diversification

The 3 months correlation between Brera and Caterpillar is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Brera Holdings PLC and Caterpillar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caterpillar and Brera Holdings 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 Brera Holdings PLC 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 Brera Holdings i.e., Brera Holdings and Caterpillar go up and down completely randomly.

Pair Corralation between Brera Holdings and Caterpillar

Given the investment horizon of 90 days Brera Holdings PLC is expected to generate 4.66 times more return on investment than Caterpillar. However, Brera Holdings is 4.66 times more volatile than Caterpillar. It trades about 0.07 of its potential returns per unit of risk. Caterpillar is currently generating about 0.16 per unit of risk. If you would invest  71.00  in Brera Holdings PLC on September 3, 2024 and sell it today you would earn a total of  14.00  from holding Brera Holdings PLC or generate 19.72% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Brera Holdings PLC  vs.  Caterpillar

Brera Holdings PLC

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Brera Holdings PLC are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical and fundamental indicators, Brera Holdings sustained solid returns over the last few months and may actually be approaching a breakup point.

Caterpillar

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Caterpillar are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Caterpillar unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Brera Holdings and Caterpillar

The main advantage of trading using opposite Brera Holdings and Caterpillar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brera Holdings 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.

The idea behind Brera Holdings PLC 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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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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.