Correlation Between Live Ventures and Caterpillar
Can any of the company-specific risk be diversified away by investing in both Live Ventures and Caterpillar 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 Live Ventures and Caterpillar into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Live Ventures and Caterpillar, you can compare the effects of market volatilities on Live Ventures and Caterpillar 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 Live Ventures with a short position of Caterpillar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Live Ventures and Caterpillar.
Diversification Opportunities for Live Ventures and Caterpillar
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Live and Caterpillar is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Live Ventures and Caterpillar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caterpillar and Live Ventures 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 Live Ventures are associated (or correlated) with Caterpillar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Caterpillar has no effect on the direction of Live Ventures i.e., Live Ventures and Caterpillar go up and down completely randomly.
Pair Corralation between Live Ventures and Caterpillar
Given the investment horizon of 90 days Live Ventures is expected to under-perform the Caterpillar. In addition to that, Live Ventures is 2.26 times more volatile than Caterpillar. It trades about -0.09 of its total potential returns per unit of risk. Caterpillar is currently generating about -0.16 per unit of volatility. If you would invest 40,104 in Caterpillar on December 2, 2024 and sell it today you would lose (5,709) from holding Caterpillar or give up 14.24% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Live Ventures vs. Caterpillar
Performance |
Timeline |
Live Ventures |
Caterpillar |
Live Ventures and Caterpillar Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Live Ventures and Caterpillar
The main advantage of trading using opposite Live Ventures and Caterpillar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Live Ventures position performs unexpectedly, Caterpillar 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 Caterpillar will offset losses from the drop in Caterpillar's long position.Live Ventures vs. Arhaus Inc | Live Ventures vs. Floor Decor Holdings | Live Ventures vs. Haverty Furniture Companies | Live Ventures vs. Kingfisher plc |
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Check out your portfolio center.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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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