Correlation Between Invesco Oppenheimer and Caterpillar

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Can any of the company-specific risk be diversified away by investing in both Invesco Oppenheimer 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 Invesco Oppenheimer and Caterpillar into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Invesco Oppenheimer Emerging and Caterpillar, you can compare the effects of market volatilities on Invesco Oppenheimer 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 Invesco Oppenheimer with a short position of Caterpillar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco Oppenheimer and Caterpillar.

Diversification Opportunities for Invesco Oppenheimer and Caterpillar

0.39
  Correlation Coefficient

Weak diversification

The 3 months correlation between Invesco and Caterpillar is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Invesco Oppenheimer Emerging and Caterpillar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caterpillar and Invesco Oppenheimer 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 Invesco Oppenheimer Emerging 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 Invesco Oppenheimer i.e., Invesco Oppenheimer and Caterpillar go up and down completely randomly.

Pair Corralation between Invesco Oppenheimer and Caterpillar

Assuming the 90 days horizon Invesco Oppenheimer is expected to generate 1.85 times less return on investment than Caterpillar. But when comparing it to its historical volatility, Invesco Oppenheimer Emerging is 2.62 times less risky than Caterpillar. It trades about 0.41 of its potential returns per unit of risk. Caterpillar is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest  17,229  in Caterpillar on May 19, 2022 and sell it today you would earn a total of  2,523  from holding Caterpillar or generate 14.64% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Invesco Oppenheimer Emerging  vs.  Caterpillar

 Performance (%) 
       Timeline  
Invesco Oppenheimer 
Invesco Performance
7 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Invesco Oppenheimer Emerging are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly unsteady forward indicators, Invesco Oppenheimer may actually be approaching a critical reversion point that can send shares even higher in September 2022.

Invesco Price Channel

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 current stock price uproar, may contribute to short-horizon losses for the private investors.

Caterpillar Price Channel

Invesco Oppenheimer and Caterpillar Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Invesco Oppenheimer and Caterpillar

The main advantage of trading using opposite Invesco Oppenheimer and Caterpillar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco Oppenheimer 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.

Invesco Oppenheimer Emerging

Pair trading matchups for Invesco Oppenheimer

The idea behind Invesco Oppenheimer Emerging and Caterpillar 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.
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.

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