Correlation Between Caterpillar and INTERSHOP Communications

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

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

Diversification Opportunities for Caterpillar and INTERSHOP Communications

0.0

Correlation Coefficient

Caterpillar  INTERSHOP Communications

Pay attention - limited upside

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

Pair Corralation between Caterpillar and INTERSHOP Communications

If you would invest  0.00  in Caterpillar on October 25, 2024 and sell it today you would earn a total of  0.00  from holding Caterpillar or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	5.88%
Values	Daily Returns

Caterpillar  vs.  INTERSHOP Communications Aktie

Caterpillar

Risk-Adjusted Performance

0 of 100

Modest

Over the last 90 days Caterpillar has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Caterpillar is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

INTERSHOP Communications

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days INTERSHOP Communications Aktiengesellschaft has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Caterpillar and INTERSHOP Communications

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

The idea behind Caterpillar and INTERSHOP Communications Aktiengesellschaft 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.