Correlation Between Caterpillar and IsoRay
Can any of the company-specific risk be diversified away by investing in both Caterpillar and IsoRay 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 IsoRay into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Caterpillar and IsoRay Inc, you can compare the effects of market volatilities on Caterpillar and IsoRay 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 IsoRay. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caterpillar and IsoRay.
Diversification Opportunities for Caterpillar and IsoRay
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Caterpillar and IsoRay is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Caterpillar and IsoRay Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IsoRay Inc 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 IsoRay. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IsoRay Inc has no effect on the direction of Caterpillar i.e., Caterpillar and IsoRay go up and down completely randomly.
Pair Corralation between Caterpillar and IsoRay
If you would invest 23,179 in Caterpillar on September 2, 2024 and sell it today you would earn a total of 17,432 from holding Caterpillar or generate 75.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 0.27% |
| Values | Daily Returns |
Caterpillar vs. IsoRay Inc
Performance |
| Timeline |
| Caterpillar |
| IsoRay Inc |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Caterpillar and IsoRay Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caterpillar and IsoRay
The main advantage of trading using opposite Caterpillar and IsoRay positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caterpillar position performs unexpectedly, IsoRay 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 IsoRay will offset losses from the drop in IsoRay's long position.| Caterpillar vs. AGCO Corporation | Caterpillar vs. Nikola Corp | Caterpillar vs. PACCAR Inc | Caterpillar vs. Deere Company |
| IsoRay vs. Freedom Internet Group | IsoRay vs. Dolphin Entertainment | IsoRay vs. Deluxe | IsoRay vs. Global E Online |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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