Correlation Between Caterpillar and Fearless Films

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

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

Diversification Opportunities for Caterpillar and Fearless Films

0.0

Correlation Coefficient

Caterpillar  Fearless Films

Pay attention - limited upside

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

Pair Corralation between Caterpillar and Fearless Films

If you would invest (100.00) in Fearless Films on December 30, 2024 and sell it today you would earn a total of  100.00  from holding Fearless Films 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.  Fearless Films

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.

Fearless Films

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fearless Films has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Fearless Films is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Caterpillar and Fearless Films

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

The idea behind Caterpillar and Fearless Films 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.