Correlation Between Caterpillar and Ivy Advantus
Can any of the company-specific risk be diversified away by investing in both Caterpillar and Ivy Advantus 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 Ivy Advantus into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Caterpillar and Ivy Advantus Bond, you can compare the effects of market volatilities on Caterpillar and Ivy Advantus 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 Ivy Advantus. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caterpillar and Ivy Advantus.
Diversification Opportunities for Caterpillar and Ivy Advantus
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Caterpillar and Ivy is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Caterpillar and Ivy Advantus Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ivy Advantus Bond 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 Ivy Advantus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ivy Advantus Bond has no effect on the direction of Caterpillar i.e., Caterpillar and Ivy Advantus go up and down completely randomly.
Pair Corralation between Caterpillar and Ivy Advantus
Considering the 90-day investment horizon Caterpillar is expected to generate 3.86 times more return on investment than Ivy Advantus. However, Caterpillar is 3.86 times more volatile than Ivy Advantus Bond. It trades about 0.09 of its potential returns per unit of risk. Ivy Advantus Bond is currently generating about 0.04 per unit of risk. If you would invest 23,496 in Caterpillar on September 12, 2024 and sell it today you would earn a total of 15,343 from holding Caterpillar or generate 65.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 77.21% |
| Values | Daily Returns |
Caterpillar vs. Ivy Advantus Bond
Performance |
| Timeline |
| Caterpillar |
| Ivy Advantus Bond |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Caterpillar and Ivy Advantus Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caterpillar and Ivy Advantus
The main advantage of trading using opposite Caterpillar and Ivy Advantus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caterpillar position performs unexpectedly, Ivy Advantus 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 Ivy Advantus will offset losses from the drop in Ivy Advantus' long position.| Caterpillar vs. Victory Integrity Smallmid Cap | Caterpillar vs. Hilton Worldwide Holdings | Caterpillar vs. NVIDIA | Caterpillar vs. JPMorgan Chase Co |
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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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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