Correlation Between Caterpillar and GeoVax Labs
Can any of the company-specific risk be diversified away by investing in both Caterpillar and GeoVax Labs 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 GeoVax Labs into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Caterpillar and GeoVax Labs, you can compare the effects of market volatilities on Caterpillar and GeoVax Labs 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 GeoVax Labs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caterpillar and GeoVax Labs.
Diversification Opportunities for Caterpillar and GeoVax Labs
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Caterpillar and GeoVax is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Caterpillar and GeoVax Labs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GeoVax Labs 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 GeoVax Labs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GeoVax Labs has no effect on the direction of Caterpillar i.e., Caterpillar and GeoVax Labs go up and down completely randomly.
Pair Corralation between Caterpillar and GeoVax Labs
Considering the 90-day investment horizon Caterpillar is expected to generate 39.09 times less return on investment than GeoVax Labs. But when comparing it to its historical volatility, Caterpillar is 19.1 times less risky than GeoVax Labs. It trades about 0.07 of its potential returns per unit of risk. GeoVax Labs is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 2.50 in GeoVax Labs on August 25, 2024 and sell it today you would earn a total of 9.50 from holding GeoVax Labs or generate 380.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 78.42% |
| Values | Daily Returns |
Caterpillar vs. GeoVax Labs
Performance |
| Timeline |
| Caterpillar |
| GeoVax Labs |
Caterpillar and GeoVax Labs Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caterpillar and GeoVax Labs
The main advantage of trading using opposite Caterpillar and GeoVax Labs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caterpillar position performs unexpectedly, GeoVax Labs 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 GeoVax Labs will offset losses from the drop in GeoVax Labs' long position.| Caterpillar vs. AGCO Corporation | Caterpillar vs. Nikola Corp | Caterpillar vs. PACCAR Inc | Caterpillar vs. Deere Company |
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 Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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