Correlation Between Caterpillar and ProShares VIX
Can any of the company-specific risk be diversified away by investing in both Caterpillar and ProShares VIX 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 ProShares VIX into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Caterpillar and ProShares VIX Short Term, you can compare the effects of market volatilities on Caterpillar and ProShares VIX 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 ProShares VIX. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caterpillar and ProShares VIX.
Diversification Opportunities for Caterpillar and ProShares VIX
-0.91 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Caterpillar and ProShares is -0.91. Overlapping area represents the amount of risk that can be diversified away by holding Caterpillar and ProShares VIX Short Term in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares VIX Short 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 ProShares VIX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares VIX Short has no effect on the direction of Caterpillar i.e., Caterpillar and ProShares VIX go up and down completely randomly.
Pair Corralation between Caterpillar and ProShares VIX
Considering the 90-day investment horizon Caterpillar is expected to generate 0.45 times more return on investment than ProShares VIX. However, Caterpillar is 2.2 times less risky than ProShares VIX. It trades about 0.26 of its potential returns per unit of risk. ProShares VIX Short Term is currently generating about -0.2 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 8,207 from holding Caterpillar or generate 23.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Caterpillar vs. ProShares VIX Short Term
Performance |
| Timeline |
| Caterpillar |
| ProShares VIX Short |
Caterpillar and ProShares VIX Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caterpillar and ProShares VIX
The main advantage of trading using opposite Caterpillar and ProShares VIX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caterpillar position performs unexpectedly, ProShares VIX 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 ProShares VIX will offset losses from the drop in ProShares VIX's long position.| Caterpillar vs. Deere Company | Caterpillar vs. AGCO Corporation | Caterpillar vs. PACCAR Inc | Caterpillar vs. CNH Industrial NV |
| ProShares VIX vs. ProShares VIX Mid Term | ProShares VIX vs. ProShares Short VIX | ProShares VIX vs. ProShares Ultra VIX | ProShares VIX vs. iPath Series B |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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