Correlation Between Caterpillar and Bny Mellon

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

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

Diversification Opportunities for Caterpillar and Bny Mellon

-0.44

Correlation Coefficient

Caterpillar  Bny Mellon

Very good diversification

The 3 months correlation between Caterpillar and Bny is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Caterpillar and Bny Mellon Alcentra in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bny Mellon Alcentra 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 Bny Mellon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bny Mellon Alcentra has no effect on the direction of Caterpillar i.e., Caterpillar and Bny Mellon go up and down completely randomly.

Pair Corralation between Caterpillar and Bny Mellon

If you would invest  924.00  in Bny Mellon Alcentra on October 7, 2024 and sell it today you would earn a total of  0.00  from holding Bny Mellon Alcentra or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	5.0%
Values	Daily Returns

Caterpillar  vs.  Bny Mellon Alcentra

Caterpillar

Risk-Adjusted Performance

0 of 100

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 latest unfluctuating 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.

Bny Mellon Alcentra

Risk-Adjusted Performance

0 of 100

Modest

Over the last 90 days Bny Mellon Alcentra has generated negative risk-adjusted returns adding no value to fund investors. Despite nearly stable fundamental indicators, Bny Mellon is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Caterpillar and Bny Mellon

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

The idea behind Caterpillar and Bny Mellon Alcentra 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 Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.