Correlation Between Caterpillar and Credit Suisse

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

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

Diversification Opportunities for Caterpillar and Credit Suisse

-0.42

Correlation Coefficient

Caterpillar  Credit Suisse

Very good diversification

The 3 months correlation between Caterpillar and Credit is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Caterpillar and Credit Suisse Modity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Credit Suisse Modity 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 Credit Suisse. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Credit Suisse Modity has no effect on the direction of Caterpillar i.e., Caterpillar and Credit Suisse go up and down completely randomly.

Pair Corralation between Caterpillar and Credit Suisse

Considering the 90-day investment horizon Caterpillar is expected to under-perform the Credit Suisse. In addition to that, Caterpillar is 2.5 times more volatile than Credit Suisse Modity. It trades about -0.08 of its total potential returns per unit of risk. Credit Suisse Modity is currently generating about 0.18 per unit of volatility. If you would invest  1,925  in Credit Suisse Modity on December 30, 2024 and sell it today you would earn a total of  150.00  from holding Credit Suisse Modity or generate 7.79% 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.  Credit Suisse Modity

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.

Credit Suisse Modity

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Credit Suisse Modity are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Credit Suisse may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Caterpillar and Credit Suisse

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

The idea behind Caterpillar and Credit Suisse Modity 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.