Correlation Between Caterpillar and Stereo Vision
Can any of the company-specific risk be diversified away by investing in both Caterpillar and Stereo Vision 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 Stereo Vision into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Caterpillar and Stereo Vision Entertainment, you can compare the effects of market volatilities on Caterpillar and Stereo Vision 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 Stereo Vision. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caterpillar and Stereo Vision.
Diversification Opportunities for Caterpillar and Stereo Vision
-0.84 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Caterpillar and Stereo is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding Caterpillar and Stereo Vision Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stereo Vision Entert 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 Stereo Vision. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stereo Vision Entert has no effect on the direction of Caterpillar i.e., Caterpillar and Stereo Vision go up and down completely randomly.
Pair Corralation between Caterpillar and Stereo Vision
If you would invest 37,924 in Caterpillar on August 31, 2024 and sell it today you would earn a total of 2,446 from holding Caterpillar or generate 6.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Caterpillar vs. Stereo Vision Entertainment
Performance |
| Timeline |
| Caterpillar |
| Stereo Vision Entert |
Caterpillar and Stereo Vision Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caterpillar and Stereo Vision
The main advantage of trading using opposite Caterpillar and Stereo Vision positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caterpillar position performs unexpectedly, Stereo Vision 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 Stereo Vision will offset losses from the drop in Stereo Vision's long position.| Caterpillar vs. Deere Company | Caterpillar vs. Lindsay | Caterpillar vs. Alamo Group | Caterpillar vs. Manitowoc |
| Stereo Vision vs. HUMANA INC | Stereo Vision vs. Aquagold International | Stereo Vision vs. Barloworld Ltd ADR | Stereo Vision vs. Thrivent High Yield |
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 Valuation module to check real value of public entities based on technical and fundamental data.
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