Correlation Between Caterpillar and JCTCF Old

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

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

Diversification Opportunities for Caterpillar and JCTCF Old

-0.41

Correlation Coefficient

Caterpillar  JCTCF Old

Very good diversification

The 3 months correlation between Caterpillar and JCTCF is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Caterpillar and JCTCF Old in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JCTCF 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 JCTCF Old. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JCTCF Old has no effect on the direction of Caterpillar i.e., Caterpillar and JCTCF Old go up and down completely randomly.

Pair Corralation between Caterpillar and JCTCF Old

If you would invest  489.00  in JCTCF Old on October 10, 2024 and sell it today you would earn a total of  0.00  from holding JCTCF Old or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	5.0%
Values	Daily Returns

Caterpillar  vs.  JCTCF Old

Caterpillar

Risk-Adjusted Performance

0 of 100

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.

JCTCF Old

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days JCTCF Old has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental indicators, JCTCF Old is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Caterpillar and JCTCF Old

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

The idea behind Caterpillar and JCTCF 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.

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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 Money Managers module to screen money managers from public funds and ETFs managed around the world.