Correlation Between Caterpillar and VectivBio Holding
Can any of the company-specific risk be diversified away by investing in both Caterpillar and VectivBio Holding 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 VectivBio Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Caterpillar and VectivBio Holding AG, you can compare the effects of market volatilities on Caterpillar and VectivBio Holding 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 VectivBio Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caterpillar and VectivBio Holding.
Diversification Opportunities for Caterpillar and VectivBio Holding
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Caterpillar and VectivBio is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Caterpillar and VectivBio Holding AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VectivBio Holding 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 VectivBio Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VectivBio Holding has no effect on the direction of Caterpillar i.e., Caterpillar and VectivBio Holding go up and down completely randomly.
Pair Corralation between Caterpillar and VectivBio Holding
If you would invest 34,383 in Caterpillar on August 24, 2024 and sell it today you would earn a total of 4,576 from holding Caterpillar or generate 13.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 0.8% |
| Values | Daily Returns |
Caterpillar vs. VectivBio Holding AG
Performance |
| Timeline |
| Caterpillar |
| VectivBio Holding |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Caterpillar and VectivBio Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caterpillar and VectivBio Holding
The main advantage of trading using opposite Caterpillar and VectivBio Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caterpillar position performs unexpectedly, VectivBio Holding 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 VectivBio Holding will offset losses from the drop in VectivBio Holding's long position.| Caterpillar vs. Small Cap Core | Caterpillar vs. Morningstar Unconstrained Allocation | Caterpillar vs. Mutual Of America | Caterpillar vs. Ep Emerging Markets |
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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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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