Correlation Between Caterpillar and Pfg Invesco

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

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

Diversification Opportunities for Caterpillar and Pfg Invesco

0.69

Correlation Coefficient

Caterpillar  Pfg Invesco

Poor diversification

The 3 months correlation between Caterpillar and Pfg is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Caterpillar and Pfg Invesco Thematic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pfg Invesco Thematic 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 Pfg Invesco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pfg Invesco Thematic has no effect on the direction of Caterpillar i.e., Caterpillar and Pfg Invesco go up and down completely randomly.

Pair Corralation between Caterpillar and Pfg Invesco

Considering the 90-day investment horizon Caterpillar is expected to under-perform the Pfg Invesco. In addition to that, Caterpillar is 2.59 times more volatile than Pfg Invesco Thematic. It trades about -0.07 of its total potential returns per unit of risk. Pfg Invesco Thematic is currently generating about -0.03 per unit of volatility. If you would invest  921.00  in Pfg Invesco Thematic on October 4, 2024 and sell it today you would lose (14.00) from holding Pfg Invesco Thematic or give up 1.52% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.41%
Values	Daily Returns

Caterpillar  vs.  Pfg Invesco Thematic

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 uncertain 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.

Pfg Invesco Thematic

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pfg Invesco Thematic has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Pfg Invesco is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Caterpillar and Pfg Invesco

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

The idea behind Caterpillar and Pfg Invesco Thematic 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.