Correlation Between Mistras and Caterpillar

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

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

Diversification Opportunities for Mistras and Caterpillar

-0.18

Correlation Coefficient

Mistras  Caterpillar

Good diversification

The 3 months correlation between Mistras and Caterpillar is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Mistras Group and Caterpillar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caterpillar and Mistras 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 Mistras Group 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 Mistras i.e., Mistras and Caterpillar go up and down completely randomly.

Pair Corralation between Mistras and Caterpillar

Allowing for the 90-day total investment horizon Mistras Group is expected to under-perform the Caterpillar. In addition to that, Mistras is 2.11 times more volatile than Caterpillar. It trades about -0.08 of its total potential returns per unit of risk. Caterpillar is currently generating about 0.39 per unit of volatility. If you would invest  31,912  in Caterpillar on May 7, 2025 and sell it today you would earn a total of  11,458  from holding Caterpillar or generate 35.9% return on investment over 90 days.

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

Mistras Group  vs.  Caterpillar

Mistras Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Mistras Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in September 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Caterpillar

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Caterpillar are ranked lower than 30 (%) 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 Mistras and Caterpillar

The main advantage of trading using opposite Mistras and Caterpillar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mistras 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 Mistras Group 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.