Correlation Between Caterpillar and Fidelity Total

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

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

Diversification Opportunities for Caterpillar and Fidelity Total

-0.59

Correlation Coefficient

Caterpillar  Fidelity Total

Excellent diversification

The 3 months correlation between Caterpillar and Fidelity is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Caterpillar and Fidelity Total Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Total Emerging 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 Fidelity Total. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Total Emerging has no effect on the direction of Caterpillar i.e., Caterpillar and Fidelity Total go up and down completely randomly.

Pair Corralation between Caterpillar and Fidelity Total

If you would invest  1,299  in Fidelity Total Emerging on September 18, 2024 and sell it today you would earn a total of  0.00  from holding Fidelity Total Emerging or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	4.76%
Values	Daily Returns

Caterpillar  vs.  Fidelity Total Emerging

Caterpillar

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Caterpillar are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent basic indicators, Caterpillar may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Fidelity Total Emerging

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fidelity Total Emerging has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong primary indicators, Fidelity Total is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Caterpillar and Fidelity Total

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

The idea behind Caterpillar and Fidelity Total Emerging 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 Transaction History module to view history of all your transactions and understand their impact on performance.