Correlation Between Caterpillar and Ridgeworth Seix
Can any of the company-specific risk be diversified away by investing in both Caterpillar and Ridgeworth Seix 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 Ridgeworth Seix into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Caterpillar and Ridgeworth Seix E, you can compare the effects of market volatilities on Caterpillar and Ridgeworth Seix 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 Ridgeworth Seix. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caterpillar and Ridgeworth Seix.
Diversification Opportunities for Caterpillar and Ridgeworth Seix
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Caterpillar and Ridgeworth is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Caterpillar and Ridgeworth Seix E in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ridgeworth Seix E 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 Ridgeworth Seix. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ridgeworth Seix E has no effect on the direction of Caterpillar i.e., Caterpillar and Ridgeworth Seix go up and down completely randomly.
Pair Corralation between Caterpillar and Ridgeworth Seix
Considering the 90-day investment horizon Caterpillar is expected to generate 6.37 times more return on investment than Ridgeworth Seix. However, Caterpillar is 6.37 times more volatile than Ridgeworth Seix E. It trades about 0.08 of its potential returns per unit of risk. Ridgeworth Seix E is currently generating about 0.08 per unit of risk. If you would invest 39,061 in Caterpillar on August 28, 2024 and sell it today you would earn a total of 1,504 from holding Caterpillar or generate 3.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Caterpillar vs. Ridgeworth Seix E
Performance |
| Timeline |
| Caterpillar |
| Ridgeworth Seix E |
Caterpillar and Ridgeworth Seix Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caterpillar and Ridgeworth Seix
The main advantage of trading using opposite Caterpillar and Ridgeworth Seix positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caterpillar position performs unexpectedly, Ridgeworth Seix 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 Ridgeworth Seix will offset losses from the drop in Ridgeworth Seix's long position.| Caterpillar vs. Lion Electric Corp | Caterpillar vs. Xos Inc | Caterpillar vs. Hydrofarm Holdings Group | Caterpillar vs. AGCO Corporation |
| Ridgeworth Seix vs. Virtus Multi Strategy Target | Ridgeworth Seix vs. Virtus Multi Sector Short | Ridgeworth Seix vs. Ridgeworth Seix High | Ridgeworth Seix vs. Ridgeworth Innovative Growth |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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