Correlation Between Caterpillar and NLS Pharmaceutics
Can any of the company-specific risk be diversified away by investing in both Caterpillar and NLS Pharmaceutics 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 NLS Pharmaceutics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Caterpillar and NLS Pharmaceutics AG, you can compare the effects of market volatilities on Caterpillar and NLS Pharmaceutics 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 NLS Pharmaceutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caterpillar and NLS Pharmaceutics.
Diversification Opportunities for Caterpillar and NLS Pharmaceutics
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Caterpillar and NLS is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Caterpillar and NLS Pharmaceutics AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NLS Pharmaceutics 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 NLS Pharmaceutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NLS Pharmaceutics has no effect on the direction of Caterpillar i.e., Caterpillar and NLS Pharmaceutics go up and down completely randomly.
Pair Corralation between Caterpillar and NLS Pharmaceutics
Considering the 90-day investment horizon Caterpillar is expected to generate 1.1 times less return on investment than NLS Pharmaceutics. But when comparing it to its historical volatility, Caterpillar is 9.87 times less risky than NLS Pharmaceutics. It trades about 0.16 of its potential returns per unit of risk. NLS Pharmaceutics AG is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 1.50 in NLS Pharmaceutics AG on September 1, 2024 and sell it today you would lose (0.50) from holding NLS Pharmaceutics AG or give up 33.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Caterpillar vs. NLS Pharmaceutics AG
Performance |
| Timeline |
| Caterpillar |
| NLS Pharmaceutics |
Caterpillar and NLS Pharmaceutics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caterpillar and NLS Pharmaceutics
The main advantage of trading using opposite Caterpillar and NLS Pharmaceutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caterpillar position performs unexpectedly, NLS Pharmaceutics 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 NLS Pharmaceutics will offset losses from the drop in NLS Pharmaceutics' long position.| Caterpillar vs. AGCO Corporation | Caterpillar vs. Nikola Corp | Caterpillar vs. PACCAR Inc | Caterpillar vs. Deere Company |
| NLS Pharmaceutics vs. Reviva Pharmaceuticals Holdings | NLS Pharmaceutics vs. GeoVax Labs | NLS Pharmaceutics vs. NLS Pharmaceutics AG | NLS Pharmaceutics vs. Lixte Biotechnology Holdings |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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