Correlation Between Caterpillar and VictoryShares Small
Can any of the company-specific risk be diversified away by investing in both Caterpillar and VictoryShares Small 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 VictoryShares Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Caterpillar and VictoryShares Small Mid, you can compare the effects of market volatilities on Caterpillar and VictoryShares Small 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 VictoryShares Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caterpillar and VictoryShares Small.
Diversification Opportunities for Caterpillar and VictoryShares Small
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Caterpillar and VictoryShares is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Caterpillar and VictoryShares Small Mid in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VictoryShares Small Mid 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 VictoryShares Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VictoryShares Small Mid has no effect on the direction of Caterpillar i.e., Caterpillar and VictoryShares Small go up and down completely randomly.
Pair Corralation between Caterpillar and VictoryShares Small
Considering the 90-day investment horizon Caterpillar is expected to under-perform the VictoryShares Small. In addition to that, Caterpillar is 1.68 times more volatile than VictoryShares Small Mid. It trades about -0.09 of its total potential returns per unit of risk. VictoryShares Small Mid is currently generating about 0.3 per unit of volatility. If you would invest 8,335 in VictoryShares Small Mid on June 4, 2025 and sell it today you would earn a total of 541.00 from holding VictoryShares Small Mid or generate 6.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Caterpillar vs. VictoryShares Small Mid
Performance |
| Timeline |
| Caterpillar |
| VictoryShares Small Mid |
Caterpillar and VictoryShares Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caterpillar and VictoryShares Small
The main advantage of trading using opposite Caterpillar and VictoryShares Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caterpillar position performs unexpectedly, VictoryShares Small 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 VictoryShares Small will offset losses from the drop in VictoryShares Small's long position.| Caterpillar vs. Deere Company | Caterpillar vs. AGCO Corporation | Caterpillar vs. PACCAR Inc | Caterpillar vs. CNH Industrial NV |
| VictoryShares Small vs. Dimensional ETF Trust | VictoryShares Small vs. ProShares Trust | VictoryShares Small vs. Vanguard Small Cap Index | VictoryShares Small vs. First Trust Multi Manager |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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