Correlation Between Caterpillar and Blackstar Enterprise

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

By analyzing existing cross correlation between Caterpillar and Blackstar Enterprise Group, you can compare the effects of market volatilities on Caterpillar and Blackstar Enterprise 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 Blackstar Enterprise. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caterpillar and Blackstar Enterprise.

Diversification Opportunities for Caterpillar and Blackstar Enterprise

0.14

Correlation Coefficient

Caterpillar  Blackstar Enterprise

Average diversification

The 3 months correlation between Caterpillar and Blackstar is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Caterpillar and Blackstar Enterprise Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackstar Enterprise 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 Blackstar Enterprise. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blackstar Enterprise has no effect on the direction of Caterpillar i.e., Caterpillar and Blackstar Enterprise go up and down completely randomly.

Pair Corralation between Caterpillar and Blackstar Enterprise

Considering the 90-day investment horizon Caterpillar is expected to generate 0.11 times more return on investment than Blackstar Enterprise. However, Caterpillar is 9.22 times less risky than Blackstar Enterprise. It trades about -0.16 of its potential returns per unit of risk. Blackstar Enterprise Group is currently generating about -0.02 per unit of risk. If you would invest  40,104  in Caterpillar on December 2, 2024 and sell it today you would lose (5,709) from holding Caterpillar or give up 14.24% of portfolio value over 90 days.

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

Caterpillar  vs.  Blackstar Enterprise Group

Caterpillar

Risk-Adjusted Performance

Very Weak

Over the last 90 days Caterpillar has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Blackstar Enterprise

Risk-Adjusted Performance

Very Weak

Over the last 90 days Blackstar Enterprise Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's technical and fundamental indicators remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Caterpillar and Blackstar Enterprise

The main advantage of trading using opposite Caterpillar and Blackstar Enterprise positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caterpillar position performs unexpectedly, Blackstar Enterprise 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 Blackstar Enterprise will offset losses from the drop in Blackstar Enterprise's long position.

The idea behind Caterpillar and Blackstar Enterprise 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.

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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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .