Correlation Between Caterpillar and Vector Acquisition
Can any of the company-specific risk be diversified away by investing in both Caterpillar and Vector Acquisition 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 Vector Acquisition into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Caterpillar and Vector Acquisition II, you can compare the effects of market volatilities on Caterpillar and Vector Acquisition 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 Vector Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caterpillar and Vector Acquisition.
Diversification Opportunities for Caterpillar and Vector Acquisition
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Caterpillar and Vector is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Caterpillar and Vector Acquisition II in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vector Acquisition 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 Vector Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vector Acquisition has no effect on the direction of Caterpillar i.e., Caterpillar and Vector Acquisition go up and down completely randomly.
Pair Corralation between Caterpillar and Vector Acquisition
If you would invest 37,963 in Caterpillar on September 2, 2024 and sell it today you would earn a total of 2,648 from holding Caterpillar or generate 6.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 4.76% |
| Values | Daily Returns |
Caterpillar vs. Vector Acquisition II
Performance |
| Timeline |
| Caterpillar |
| Vector Acquisition |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Caterpillar and Vector Acquisition Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caterpillar and Vector Acquisition
The main advantage of trading using opposite Caterpillar and Vector Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caterpillar position performs unexpectedly, Vector Acquisition 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 Vector Acquisition will offset losses from the drop in Vector Acquisition's long position.| Caterpillar vs. AGCO Corporation | Caterpillar vs. Nikola Corp | Caterpillar vs. PACCAR Inc | Caterpillar vs. Deere Company |
| Vector Acquisition vs. Goldenstone Acquisition | Vector Acquisition vs. Manaris Corp | Vector Acquisition vs. Alpha One |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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