Correlation Between Caterpillar and 91324PES7

Can any of the company-specific risk be diversified away by investing in both Caterpillar and 91324PES7 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 91324PES7 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Caterpillar and UNH 5875 15 FEB 53, you can compare the effects of market volatilities on Caterpillar and 91324PES7 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 91324PES7. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caterpillar and 91324PES7.

Diversification Opportunities for Caterpillar and 91324PES7

-0.34

Correlation Coefficient

Caterpillar  91324PES7

Very good diversification

The 3 months correlation between Caterpillar and 91324PES7 is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Caterpillar and UNH 5875 15 FEB 53 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UNH 5875 15 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 91324PES7. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UNH 5875 15 has no effect on the direction of Caterpillar i.e., Caterpillar and 91324PES7 go up and down completely randomly.

Pair Corralation between Caterpillar and 91324PES7

Considering the 90-day investment horizon Caterpillar is expected to under-perform the 91324PES7. But the stock apears to be less risky and, when comparing its historical volatility, Caterpillar is 2.32 times less risky than 91324PES7. The stock trades about -0.41 of its potential returns per unit of risk. The UNH 5875 15 FEB 53 is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  10,643  in UNH 5875 15 FEB 53 on October 9, 2024 and sell it today you would earn a total of  442.00  from holding UNH 5875 15 FEB 53 or generate 4.15% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.0%
Values	Daily Returns

Caterpillar  vs.  UNH 5875 15 FEB 53

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.

UNH 5875 15

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in UNH 5875 15 FEB 53 are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, 91324PES7 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 91324PES7

The main advantage of trading using opposite Caterpillar and 91324PES7 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caterpillar position performs unexpectedly, 91324PES7 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 91324PES7 will offset losses from the drop in 91324PES7's long position.

The idea behind Caterpillar and UNH 5875 15 FEB 53 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.