Correlation Between Caterpillar and C4 Therapeutics
Can any of the company-specific risk be diversified away by investing in both Caterpillar and C4 Therapeutics 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 C4 Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Caterpillar and C4 Therapeutics, you can compare the effects of market volatilities on Caterpillar and C4 Therapeutics 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 C4 Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caterpillar and C4 Therapeutics.
Diversification Opportunities for Caterpillar and C4 Therapeutics
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Caterpillar and CCCC is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Caterpillar and C4 Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on C4 Therapeutics 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 C4 Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of C4 Therapeutics has no effect on the direction of Caterpillar i.e., Caterpillar and C4 Therapeutics go up and down completely randomly.
Pair Corralation between Caterpillar and C4 Therapeutics
Considering the 90-day investment horizon Caterpillar is expected to generate 1.3 times less return on investment than C4 Therapeutics. But when comparing it to its historical volatility, Caterpillar is 5.35 times less risky than C4 Therapeutics. It trades about 0.08 of its potential returns per unit of risk. C4 Therapeutics is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 828.00 in C4 Therapeutics on August 24, 2024 and sell it today you would lose (403.00) from holding C4 Therapeutics or give up 48.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Caterpillar vs. C4 Therapeutics
Performance |
| Timeline |
| Caterpillar |
| C4 Therapeutics |
Caterpillar and C4 Therapeutics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caterpillar and C4 Therapeutics
The main advantage of trading using opposite Caterpillar and C4 Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caterpillar position performs unexpectedly, C4 Therapeutics 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 C4 Therapeutics will offset losses from the drop in C4 Therapeutics' long position.| Caterpillar vs. AGCO Corporation | Caterpillar vs. Nikola Corp | Caterpillar vs. PACCAR Inc | Caterpillar vs. Deere Company |
| C4 Therapeutics vs. Shattuck Labs | C4 Therapeutics vs. Eliem Therapeutics | C4 Therapeutics vs. Prelude Therapeutics | C4 Therapeutics vs. Monte Rosa Therapeutics |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
Other Complementary Tools
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges |