Correlation Between Caterpillar and Oaktree (lux)

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

By analyzing existing cross correlation between Caterpillar and Oaktree Iii , you can compare the effects of market volatilities on Caterpillar and Oaktree (lux) 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 Oaktree (lux). Check out your portfolio center. Please also check ongoing floating volatility patterns of Caterpillar and Oaktree (lux).

Diversification Opportunities for Caterpillar and Oaktree (lux)

-0.57

Correlation Coefficient

Caterpillar  Oaktree (lux)

Excellent diversification

The 3 months correlation between Caterpillar and Oaktree is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Caterpillar and Oaktree Iii in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oaktree (lux) 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 Oaktree (lux). Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oaktree (lux) has no effect on the direction of Caterpillar i.e., Caterpillar and Oaktree (lux) go up and down completely randomly.

Pair Corralation between Caterpillar and Oaktree (lux)

Considering the 90-day investment horizon Caterpillar is expected to under-perform the Oaktree (lux). In addition to that, Caterpillar is 18.96 times more volatile than Oaktree Iii . It trades about -0.06 of its total potential returns per unit of risk. Oaktree Iii is currently generating about 0.27 per unit of volatility. If you would invest  13,501  in Oaktree Iii on December 25, 2024 and sell it today you would earn a total of  198.00  from holding Oaktree Iii or generate 1.47% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Caterpillar  vs.  Oaktree Iii

Caterpillar

Risk-Adjusted Performance

Very Weak

Over the last 90 days Caterpillar has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Caterpillar is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Oaktree (lux)

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Oaktree Iii are ranked lower than 21 (%) of all funds and portfolios of funds over the last 90 days. Despite nearly stable basic indicators, Oaktree (lux) is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Caterpillar and Oaktree (lux)

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

The idea behind Caterpillar and Oaktree Iii 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.