Correlation Between Caterpillar and Tidal Trust

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

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

Diversification Opportunities for Caterpillar and Tidal Trust

-0.79

Correlation Coefficient

Caterpillar  Tidal Trust

Pay attention - limited upside

The 3 months correlation between Caterpillar and Tidal is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Caterpillar and Tidal Trust II in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tidal Trust II 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 Tidal Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tidal Trust II has no effect on the direction of Caterpillar i.e., Caterpillar and Tidal Trust go up and down completely randomly.

Pair Corralation between Caterpillar and Tidal Trust

Considering the 90-day investment horizon Caterpillar is expected to generate 0.99 times more return on investment than Tidal Trust. However, Caterpillar is 1.01 times less risky than Tidal Trust. It trades about 0.11 of its potential returns per unit of risk. Tidal Trust II is currently generating about -0.14 per unit of risk. If you would invest  35,483  in Caterpillar on August 30, 2024 and sell it today you would earn a total of  4,887  from holding Caterpillar or generate 13.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Caterpillar  vs.  Tidal Trust II

Caterpillar

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Caterpillar are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Caterpillar unveiled solid returns over the last few months and may actually be approaching a breakup point.

Tidal Trust II

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tidal Trust II 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 Etf's basic indicators remain comparatively stable which may send shares a bit higher in December 2024. The newest uproar may also be a sign of mid-term up-swing for the exchange-traded fund private investors.

Pair Trading with Caterpillar and Tidal Trust

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

The idea behind Caterpillar and Tidal Trust II 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.