Correlation Between Caterpillar and Virtus Global

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

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

Diversification Opportunities for Caterpillar and Virtus Global

0.0

Correlation Coefficient

Caterpillar  Virtus Global

Pay attention - limited upside

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

Pair Corralation between Caterpillar and Virtus Global

If you would invest  0.00  in Virtus Global Opportunities on December 22, 2024 and sell it today you would earn a total of  0.00  from holding Virtus Global Opportunities or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	1.67%
Values	Daily Returns

Caterpillar  vs.  Virtus Global Opportunities

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.

Virtus Global Opport

Risk-Adjusted Performance

Very Weak

Over the last 90 days Virtus Global Opportunities has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Virtus Global 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 Virtus Global

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

The idea behind Caterpillar and Virtus Global Opportunities 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.