Correlation Between Caterpillar and Virtus ETF
Can any of the company-specific risk be diversified away by investing in both Caterpillar and Virtus ETF 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 Virtus ETF into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Caterpillar and Virtus ETF Trust, you can compare the effects of market volatilities on Caterpillar and Virtus ETF 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 Virtus ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caterpillar and Virtus ETF.
Diversification Opportunities for Caterpillar and Virtus ETF
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Caterpillar and Virtus is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Caterpillar and Virtus ETF Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtus ETF Trust 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 Virtus ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virtus ETF Trust has no effect on the direction of Caterpillar i.e., Caterpillar and Virtus ETF go up and down completely randomly.
Pair Corralation between Caterpillar and Virtus ETF
Considering the 90-day investment horizon Caterpillar is expected to generate 17.74 times more return on investment than Virtus ETF. However, Caterpillar is 17.74 times more volatile than Virtus ETF Trust. It trades about 0.27 of its potential returns per unit of risk. Virtus ETF Trust is currently generating about 0.49 per unit of risk. If you would invest 35,023 in Caterpillar on May 27, 2025 and sell it today you would earn a total of 8,544 from holding Caterpillar or generate 24.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Caterpillar vs. Virtus ETF Trust
Performance |
| Timeline |
| Caterpillar |
| Virtus ETF Trust |
Caterpillar and Virtus ETF Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caterpillar and Virtus ETF
The main advantage of trading using opposite Caterpillar and Virtus ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caterpillar position performs unexpectedly, Virtus ETF 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 Virtus ETF will offset losses from the drop in Virtus ETF's long position.| Caterpillar vs. Deere Company | Caterpillar vs. AGCO Corporation | Caterpillar vs. PACCAR Inc | Caterpillar vs. CNH Industrial NV |
| Virtus ETF vs. Franklin Liberty Senior | Virtus ETF vs. Pacer Pacific Asset | Virtus ETF vs. Virtus Newfleet Multi Sector |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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