Correlation Between Caterpillar and Genesis Growth
Can any of the company-specific risk be diversified away by investing in both Caterpillar and Genesis Growth 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 Genesis Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Caterpillar and Genesis Growth Tech, you can compare the effects of market volatilities on Caterpillar and Genesis Growth 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 Genesis Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caterpillar and Genesis Growth.
Diversification Opportunities for Caterpillar and Genesis Growth
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Caterpillar and Genesis is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Caterpillar and Genesis Growth Tech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genesis Growth Tech 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 Genesis Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Genesis Growth Tech has no effect on the direction of Caterpillar i.e., Caterpillar and Genesis Growth go up and down completely randomly.
Pair Corralation between Caterpillar and Genesis Growth
If you would invest 38,751 in Caterpillar on August 30, 2024 and sell it today you would earn a total of 1,619 from holding Caterpillar or generate 4.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 4.35% |
| Values | Daily Returns |
Caterpillar vs. Genesis Growth Tech
Performance |
| Timeline |
| Caterpillar |
| Genesis Growth Tech |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Caterpillar and Genesis Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caterpillar and Genesis Growth
The main advantage of trading using opposite Caterpillar and Genesis Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caterpillar position performs unexpectedly, Genesis Growth 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 Genesis Growth will offset losses from the drop in Genesis Growth's long position.| Caterpillar vs. AGCO Corporation | Caterpillar vs. Nikola Corp | Caterpillar vs. PACCAR Inc | Caterpillar vs. Deere Company |
| Genesis Growth vs. Tesla Inc | Genesis Growth vs. Brunswick | Genesis Growth vs. Radcom | Genesis Growth vs. Cars Inc |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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