Correlation Between Caterpillar and 2x Long

Can any of the company-specific risk be diversified away by investing in both Caterpillar and 2x Long 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 2x Long into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Caterpillar and 2x Long VIX, you can compare the effects of market volatilities on Caterpillar and 2x Long 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 2x Long. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caterpillar and 2x Long.

Diversification Opportunities for Caterpillar and 2x Long

-0.55

Correlation Coefficient

Caterpillar  2x Long

Excellent diversification

The 3 months correlation between Caterpillar and UVIX is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Caterpillar and 2x Long VIX in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 2x Long VIX 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 2x Long. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 2x Long VIX has no effect on the direction of Caterpillar i.e., Caterpillar and 2x Long go up and down completely randomly.

Pair Corralation between Caterpillar and 2x Long

Considering the 90-day investment horizon Caterpillar is expected to generate 0.32 times more return on investment than 2x Long. However, Caterpillar is 3.13 times less risky than 2x Long. It trades about 0.22 of its potential returns per unit of risk. 2x Long VIX is currently generating about -0.1 per unit of risk. If you would invest  43,246  in Caterpillar on August 4, 2025 and sell it today you would earn a total of  14,480  from holding Caterpillar or generate 33.48% 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.  2x Long VIX

Caterpillar

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Caterpillar are ranked lower than 17 (%) 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.

2x Long VIX

Risk-Adjusted Performance

Weakest

Over the last 90 days 2x Long VIX has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Etf's forward indicators remain fairly strong which may send shares a bit higher in December 2025. The current disturbance may also be a sign of long term up-swing for the ETF investors.

Pair Trading with Caterpillar and 2x Long

The main advantage of trading using opposite Caterpillar and 2x Long positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caterpillar position performs unexpectedly, 2x Long 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 2x Long will offset losses from the drop in 2x Long's long position.

The idea behind Caterpillar and 2x Long VIX 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.