Correlation Between Caterpillar and Focused Dynamic

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Caterpillar and Focused Dynamic 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 Focused Dynamic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Caterpillar and Focused Dynamic Growth, you can compare the effects of market volatilities on Caterpillar and Focused Dynamic 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 Focused Dynamic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caterpillar and Focused Dynamic.

Diversification Opportunities for Caterpillar and Focused Dynamic

0.81
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Caterpillar and Focused is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Caterpillar and Focused Dynamic Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Focused Dynamic Growth 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 Focused Dynamic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Focused Dynamic Growth has no effect on the direction of Caterpillar i.e., Caterpillar and Focused Dynamic go up and down completely randomly.

Pair Corralation between Caterpillar and Focused Dynamic

Considering the 90-day investment horizon Caterpillar is expected to under-perform the Focused Dynamic. In addition to that, Caterpillar is 1.12 times more volatile than Focused Dynamic Growth. It trades about -0.27 of its total potential returns per unit of risk. Focused Dynamic Growth is currently generating about -0.17 per unit of volatility. If you would invest  4,270  in Focused Dynamic Growth on July 1, 2022 and sell it today you would lose (267.00)  from holding Focused Dynamic Growth or give up 6.25% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy95.45%
ValuesDaily Returns

Caterpillar  vs.  Focused Dynamic Growth

 Performance (%) 
       Timeline  
Caterpillar 
Caterpillar Performance
0 of 100
Over the last 90 days Caterpillar has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Caterpillar is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Caterpillar Price Channel

Focused Dynamic Growth 
Focused Performance
2 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Focused Dynamic Growth are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Focused Dynamic is not utilizing all of its potentials. The new stock price disturbance, may contribute to short-term losses for the investors.

Focused Price Channel

Caterpillar and Focused Dynamic Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Caterpillar and Focused Dynamic

The main advantage of trading using opposite Caterpillar and Focused Dynamic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caterpillar position performs unexpectedly, Focused Dynamic 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 Focused Dynamic will offset losses from the drop in Focused Dynamic's long position.
Caterpillar vs. Amazon Inc
The idea behind Caterpillar and Focused Dynamic Growth pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
Focused Dynamic vs. JP Morgan Chase
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.

Other Complementary Tools

Pair Correlation
Compare performance and examine fundamental relationship between any two equity instruments
Go
Piotroski F Score
Get Piotroski F Score based on binary analysis strategy of nine different fundamentals
Go
Fundamental Analysis
View fundamental data based on most recent published financial statements
Go
Money Flow Index
Determine momentum by analyzing Money Flow Index and other technical indicators
Go
Price Exposure Probability
Analyze equity upside and downside potential for a given time horizon across multiple markets
Go
ETF Directory
Find actively traded Exchange Traded Funds (ETF) from around the world
Go
Portfolio Comparator
Compare the composition, asset allocations and performance of any two portfolios in your account
Go
Global Markets Map
Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes
Go
Bond Analysis
Evaluate and analyze corporate bonds as a potential investment for your portfolios.
Go
Focused Opportunities
Build portfolios using our predefined set of ideas and optimize them against your investing preferences
Go
Technical Analysis
Check basic technical indicators and analysis based on most latest market data
Go