Correlation Between FrontView REIT, and Caterpillar

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

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

Diversification Opportunities for FrontView REIT, and Caterpillar

0.77

Correlation Coefficient

FrontView REIT,  Caterpillar

Poor diversification

The 3 months correlation between FrontView and Caterpillar is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding FrontView REIT, and Caterpillar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caterpillar and FrontView REIT, 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 FrontView REIT, are associated (or correlated) with Caterpillar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Caterpillar has no effect on the direction of FrontView REIT, i.e., FrontView REIT, and Caterpillar go up and down completely randomly.

Pair Corralation between FrontView REIT, and Caterpillar

Considering the 90-day investment horizon FrontView REIT, is expected to generate 2.19 times less return on investment than Caterpillar. In addition to that, FrontView REIT, is 1.89 times more volatile than Caterpillar. It trades about 0.06 of its total potential returns per unit of risk. Caterpillar is currently generating about 0.24 per unit of volatility. If you would invest  35,128  in Caterpillar on May 17, 2025 and sell it today you would earn a total of  6,622  from holding Caterpillar or generate 18.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

FrontView REIT,  vs.  Caterpillar

FrontView REIT,

Risk-Adjusted Performance

Soft

Compared to the overall equity markets, risk-adjusted returns on investments in FrontView REIT, are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, FrontView REIT, may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Caterpillar

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Caterpillar are ranked lower than 18 (%) 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.

Pair Trading with FrontView REIT, and Caterpillar

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

The idea behind FrontView REIT, and Caterpillar 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.