Correlation Between Caterpillar and VIACOM
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By analyzing existing cross correlation between Caterpillar and VIACOM INC 7875, you can compare the effects of market volatilities on Caterpillar and VIACOM 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 VIACOM. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caterpillar and VIACOM.
Diversification Opportunities for Caterpillar and VIACOM
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Caterpillar and VIACOM is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Caterpillar and VIACOM INC 7875 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VIACOM INC 7875 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 VIACOM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VIACOM INC 7875 has no effect on the direction of Caterpillar i.e., Caterpillar and VIACOM go up and down completely randomly.
Pair Corralation between Caterpillar and VIACOM
Considering the 90-day investment horizon Caterpillar is expected to generate 1.61 times more return on investment than VIACOM. However, Caterpillar is 1.61 times more volatile than VIACOM INC 7875. It trades about 0.16 of its potential returns per unit of risk. VIACOM INC 7875 is currently generating about -0.09 per unit of risk. If you would invest 33,902 in Caterpillar on September 2, 2024 and sell it today you would earn a total of 6,709 from holding Caterpillar or generate 19.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.31% |
| Values | Daily Returns |
Caterpillar vs. VIACOM INC 7875
Performance |
| Timeline |
| Caterpillar |
| VIACOM INC 7875 |
Caterpillar and VIACOM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caterpillar and VIACOM
The main advantage of trading using opposite Caterpillar and VIACOM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caterpillar position performs unexpectedly, VIACOM 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 VIACOM will offset losses from the drop in VIACOM's long position.| Caterpillar vs. AGCO Corporation | Caterpillar vs. Nikola Corp | Caterpillar vs. PACCAR Inc | Caterpillar vs. Deere Company |
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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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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