Correlation Between Caterpillar and ReTo Eco
Can any of the company-specific risk be diversified away by investing in both Caterpillar and ReTo Eco 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 ReTo Eco into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Caterpillar and ReTo Eco Solutions, you can compare the effects of market volatilities on Caterpillar and ReTo Eco 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 ReTo Eco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caterpillar and ReTo Eco.
Diversification Opportunities for Caterpillar and ReTo Eco
-0.78 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Caterpillar and ReTo is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Caterpillar and ReTo Eco Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ReTo Eco Solutions 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 ReTo Eco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ReTo Eco Solutions has no effect on the direction of Caterpillar i.e., Caterpillar and ReTo Eco go up and down completely randomly.
Pair Corralation between Caterpillar and ReTo Eco
Considering the 90-day investment horizon Caterpillar is expected to generate 0.28 times more return on investment than ReTo Eco. However, Caterpillar is 3.52 times less risky than ReTo Eco. It trades about 0.25 of its potential returns per unit of risk. ReTo Eco Solutions is currently generating about -0.21 per unit of risk. If you would invest 41,007 in Caterpillar on July 21, 2025 and sell it today you would earn a total of 11,701 from holding Caterpillar or generate 28.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Caterpillar vs. ReTo Eco Solutions
Performance |
| Timeline |
| Caterpillar |
| ReTo Eco Solutions |
Caterpillar and ReTo Eco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caterpillar and ReTo Eco
The main advantage of trading using opposite Caterpillar and ReTo Eco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caterpillar position performs unexpectedly, ReTo Eco 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 ReTo Eco will offset losses from the drop in ReTo Eco's long position.| Caterpillar vs. Digi Power X | Caterpillar vs. Japan Airlines Ltd | Caterpillar vs. Amtech Systems | Caterpillar vs. Courtside Group, Common |
| ReTo Eco vs. Namib Minerals Ordinary | ReTo Eco vs. Origin Materials | ReTo Eco vs. N2OFF Inc | ReTo Eco vs. Capstone Holding 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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