Correlation Between Caterpillar and MFS Active
Can any of the company-specific risk be diversified away by investing in both Caterpillar and MFS Active 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 MFS Active into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Caterpillar and MFS Active Value, you can compare the effects of market volatilities on Caterpillar and MFS Active 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 MFS Active. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caterpillar and MFS Active.
Diversification Opportunities for Caterpillar and MFS Active
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Caterpillar and MFS is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Caterpillar and MFS Active Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MFS Active Value 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 MFS Active. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MFS Active Value has no effect on the direction of Caterpillar i.e., Caterpillar and MFS Active go up and down completely randomly.
Pair Corralation between Caterpillar and MFS Active
Considering the 90-day investment horizon Caterpillar is expected to generate 2.41 times more return on investment than MFS Active. However, Caterpillar is 2.41 times more volatile than MFS Active Value. It trades about 0.22 of its potential returns per unit of risk. MFS Active Value is currently generating about 0.15 per unit of risk. If you would invest 34,806 in Caterpillar on June 4, 2025 and sell it today you would earn a total of 7,098 from holding Caterpillar or generate 20.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Caterpillar vs. MFS Active Value
Performance |
| Timeline |
| Caterpillar |
| MFS Active Value |
Caterpillar and MFS Active Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caterpillar and MFS Active
The main advantage of trading using opposite Caterpillar and MFS Active positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caterpillar position performs unexpectedly, MFS Active 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 MFS Active will offset losses from the drop in MFS Active's long position.| Caterpillar vs. Deere Company | Caterpillar vs. AGCO Corporation | Caterpillar vs. PACCAR Inc | Caterpillar vs. CNH Industrial NV |
| MFS Active vs. FT Vest Equity | MFS Active vs. Northern Lights | MFS Active vs. Dimensional International High | MFS Active vs. JPMorgan Fundamental Data |
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 Correlations module to find global opportunities by holding instruments from different markets.
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