Correlation Between OppFi and Caterpillar
Can any of the company-specific risk be diversified away by investing in both OppFi and Caterpillar 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 OppFi and Caterpillar into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between OppFi Inc and Caterpillar, you can compare the effects of market volatilities on OppFi and Caterpillar 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 OppFi with a short position of Caterpillar. Check out your portfolio center. Please also check ongoing floating volatility patterns of OppFi and Caterpillar.
Diversification Opportunities for OppFi and Caterpillar
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between OppFi and Caterpillar is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding OppFi Inc and Caterpillar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caterpillar and OppFi 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 OppFi Inc are associated (or correlated) with Caterpillar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Caterpillar has no effect on the direction of OppFi i.e., OppFi and Caterpillar go up and down completely randomly.
Pair Corralation between OppFi and Caterpillar
Given the investment horizon of 90 days OppFi Inc is expected to generate 2.34 times more return on investment than Caterpillar. However, OppFi is 2.34 times more volatile than Caterpillar. It trades about 0.49 of its potential returns per unit of risk. Caterpillar is currently generating about 0.17 per unit of risk. If you would invest 485.00 in OppFi Inc on September 3, 2024 and sell it today you would earn a total of 331.00 from holding OppFi Inc or generate 68.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
OppFi Inc vs. Caterpillar
Performance |
| Timeline |
| OppFi Inc |
| Caterpillar |
OppFi and Caterpillar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with OppFi and Caterpillar
The main advantage of trading using opposite OppFi and Caterpillar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if OppFi position performs unexpectedly, Caterpillar 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 Caterpillar will offset losses from the drop in Caterpillar's long position.| OppFi vs. Highway Holdings Limited | OppFi vs. QCR Holdings | OppFi vs. Partner Communications | OppFi vs. Acumen Pharmaceuticals |
| Caterpillar vs. Partner Communications | Caterpillar vs. Merck Company | Caterpillar vs. Western Midstream Partners | Caterpillar vs. Edgewise Therapeutics |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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