Correlation Between Caterpillar and Barrister Energy
Can any of the company-specific risk be diversified away by investing in both Caterpillar and Barrister Energy 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 Barrister Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Caterpillar and Barrister Energy LLC, you can compare the effects of market volatilities on Caterpillar and Barrister Energy 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 Barrister Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caterpillar and Barrister Energy.
Diversification Opportunities for Caterpillar and Barrister Energy
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Caterpillar and Barrister is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Caterpillar and Barrister Energy LLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barrister Energy LLC 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 Barrister Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Barrister Energy LLC has no effect on the direction of Caterpillar i.e., Caterpillar and Barrister Energy go up and down completely randomly.
Pair Corralation between Caterpillar and Barrister Energy
Considering the 90-day investment horizon Caterpillar is expected to generate 0.28 times more return on investment than Barrister Energy. However, Caterpillar is 3.57 times less risky than Barrister Energy. It trades about 0.23 of its potential returns per unit of risk. Barrister Energy LLC is currently generating about 0.06 per unit of risk. If you would invest 34,769 in Caterpillar on June 5, 2025 and sell it today you would earn a total of 7,135 from holding Caterpillar or generate 20.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 96.83% |
| Values | Daily Returns |
Caterpillar vs. Barrister Energy LLC
Performance |
| Timeline |
| Caterpillar |
| Barrister Energy LLC |
Caterpillar and Barrister Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caterpillar and Barrister Energy
The main advantage of trading using opposite Caterpillar and Barrister Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caterpillar position performs unexpectedly, Barrister Energy 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 Barrister Energy will offset losses from the drop in Barrister Energy's long position.| Caterpillar vs. Deere Company | Caterpillar vs. AGCO Corporation | Caterpillar vs. PACCAR Inc | Caterpillar vs. CNH Industrial NV |
| Barrister Energy vs. Buru Energy Limited | Barrister Energy vs. Altura Energy | Barrister Energy vs. Daybreak Oil and | Barrister Energy vs. Arrow Exploration Corp |
Check out your portfolio center.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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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