Correlation Between Caterpillar and Repligen

Can any of the company-specific risk be diversified away by investing in both Caterpillar and Repligen 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 Repligen into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Caterpillar and Repligen, you can compare the effects of market volatilities on Caterpillar and Repligen 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 Repligen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caterpillar and Repligen.

Diversification Opportunities for Caterpillar and Repligen

-0.53

Correlation Coefficient

Caterpillar  Repligen

Excellent diversification

The 3 months correlation between Caterpillar and Repligen is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Caterpillar and Repligen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Repligen 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 Repligen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Repligen has no effect on the direction of Caterpillar i.e., Caterpillar and Repligen go up and down completely randomly.

Pair Corralation between Caterpillar and Repligen

Considering the 90-day investment horizon Caterpillar is expected to generate 0.55 times more return on investment than Repligen. However, Caterpillar is 1.81 times less risky than Repligen. It trades about 0.08 of its potential returns per unit of risk. Repligen is currently generating about -0.05 per unit of risk. If you would invest  35,845  in Caterpillar on May 4, 2025 and sell it today you would earn a total of  7,024  from holding Caterpillar or generate 19.6% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Caterpillar  vs.  Repligen

Caterpillar

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Caterpillar are ranked lower than 28 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Caterpillar unveiled solid returns over the last few months and may actually be approaching a breakup point.

Repligen

Risk-Adjusted Performance

Very Weak

Over the last 90 days Repligen has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's technical and fundamental indicators remain very healthy which may send shares a bit higher in September 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Caterpillar and Repligen

The main advantage of trading using opposite Caterpillar and Repligen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caterpillar position performs unexpectedly, Repligen 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 Repligen will offset losses from the drop in Repligen's long position.

The idea behind Caterpillar and Repligen 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.

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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 Commodity Directory module to find actively traded commodities issued by global exchanges.