Correlation Between Caterpillar and Cytodyn
Can any of the company-specific risk be diversified away by investing in both Caterpillar and Cytodyn 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 Cytodyn into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Caterpillar and Cytodyn, you can compare the effects of market volatilities on Caterpillar and Cytodyn 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 Cytodyn. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caterpillar and Cytodyn.
Diversification Opportunities for Caterpillar and Cytodyn
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Caterpillar and Cytodyn is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Caterpillar and Cytodyn in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cytodyn 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 Cytodyn. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cytodyn has no effect on the direction of Caterpillar i.e., Caterpillar and Cytodyn go up and down completely randomly.
Pair Corralation between Caterpillar and Cytodyn
Considering the 90-day investment horizon Caterpillar is expected to generate 0.44 times more return on investment than Cytodyn. However, Caterpillar is 2.25 times less risky than Cytodyn. It trades about 0.11 of its potential returns per unit of risk. Cytodyn is currently generating about -0.04 per unit of risk. If you would invest 32,507 in Caterpillar on September 2, 2024 and sell it today you would earn a total of 8,104 from holding Caterpillar or generate 24.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Caterpillar vs. Cytodyn
Performance |
| Timeline |
| Caterpillar |
| Cytodyn |
Caterpillar and Cytodyn Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caterpillar and Cytodyn
The main advantage of trading using opposite Caterpillar and Cytodyn positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caterpillar position performs unexpectedly, Cytodyn 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 Cytodyn will offset losses from the drop in Cytodyn's long position.| Caterpillar vs. AGCO Corporation | Caterpillar vs. Nikola Corp | Caterpillar vs. PACCAR Inc | Caterpillar vs. Deere Company |
| Cytodyn vs. Madrigal Pharmaceuticals | Cytodyn vs. Scpharmaceuticals | Cytodyn vs. Akero Therapeutics | Cytodyn vs. Cardiff Oncology |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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