Correlation Between Caterpillar and Dimensional ETF
Can any of the company-specific risk be diversified away by investing in both Caterpillar and Dimensional ETF 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 Dimensional ETF into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Caterpillar and Dimensional ETF Trust, you can compare the effects of market volatilities on Caterpillar and Dimensional ETF 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 Dimensional ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caterpillar and Dimensional ETF.
Diversification Opportunities for Caterpillar and Dimensional ETF
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Caterpillar and Dimensional is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Caterpillar and Dimensional ETF Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dimensional ETF Trust 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 Dimensional ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dimensional ETF Trust has no effect on the direction of Caterpillar i.e., Caterpillar and Dimensional ETF go up and down completely randomly.
Pair Corralation between Caterpillar and Dimensional ETF
Considering the 90-day investment horizon Caterpillar is expected to generate 2.83 times more return on investment than Dimensional ETF. However, Caterpillar is 2.83 times more volatile than Dimensional ETF Trust. It trades about 0.25 of its potential returns per unit of risk. Dimensional ETF Trust is currently generating about 0.12 per unit of risk. If you would invest 41,486 in Caterpillar on September 2, 2025 and sell it today you would earn a total of 16,090 from holding Caterpillar or generate 38.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Caterpillar vs. Dimensional ETF Trust
Performance |
| Timeline |
| Caterpillar |
| Dimensional ETF Trust |
Caterpillar and Dimensional ETF Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caterpillar and Dimensional ETF
The main advantage of trading using opposite Caterpillar and Dimensional ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caterpillar position performs unexpectedly, Dimensional ETF 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 Dimensional ETF will offset losses from the drop in Dimensional ETF's long position.| Caterpillar vs. National Healthcare Logistics | Caterpillar vs. Yooma Wellness | Caterpillar vs. PureTech Health plc | Caterpillar vs. Viemed Healthcare |
| Dimensional ETF vs. Strategy Shares | Dimensional ETF vs. Freedom Day Dividend | Dimensional ETF vs. Franklin Templeton ETF | Dimensional ETF vs. iShares MSCI China |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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