Correlation Between Caterpillar and CNDB Old

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

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

Diversification Opportunities for Caterpillar and CNDB Old

0.0

Correlation Coefficient

Caterpillar  CNDB Old

Pay attention - limited upside

The 3 months correlation between Caterpillar and CNDB is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Caterpillar and CNDB Old in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CNDB Old 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 CNDB Old. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CNDB Old has no effect on the direction of Caterpillar i.e., Caterpillar and CNDB Old go up and down completely randomly.

Pair Corralation between Caterpillar and CNDB Old

If you would invest (100.00) in CNDB Old on December 30, 2024 and sell it today you would earn a total of  100.00  from holding CNDB Old or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Caterpillar  vs.  CNDB Old

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 latest unfluctuating performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

CNDB Old

Risk-Adjusted Performance

Very Weak

Over the last 90 days CNDB Old has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental indicators, CNDB Old is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Caterpillar and CNDB Old

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

The idea behind Caterpillar and CNDB Old 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.

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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.