Correlation Between Caterpillar and AMAZONCOM
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By analyzing existing cross correlation between Caterpillar and AMAZONCOM INC, you can compare the effects of market volatilities on Caterpillar and AMAZONCOM 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 AMAZONCOM. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caterpillar and AMAZONCOM.
Diversification Opportunities for Caterpillar and AMAZONCOM
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Caterpillar and AMAZONCOM is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Caterpillar and AMAZONCOM INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMAZONCOM INC 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 AMAZONCOM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AMAZONCOM INC has no effect on the direction of Caterpillar i.e., Caterpillar and AMAZONCOM go up and down completely randomly.
Pair Corralation between Caterpillar and AMAZONCOM
Considering the 90-day investment horizon Caterpillar is expected to generate 4.71 times more return on investment than AMAZONCOM. However, Caterpillar is 4.71 times more volatile than AMAZONCOM INC. It trades about 0.08 of its potential returns per unit of risk. AMAZONCOM INC is currently generating about 0.01 per unit of risk. If you would invest 22,477 in Caterpillar on September 2, 2024 and sell it today you would earn a total of 18,134 from holding Caterpillar or generate 80.68% 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. AMAZONCOM INC
Performance |
| Timeline |
| Caterpillar |
| AMAZONCOM INC |
Caterpillar and AMAZONCOM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caterpillar and AMAZONCOM
The main advantage of trading using opposite Caterpillar and AMAZONCOM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caterpillar position performs unexpectedly, AMAZONCOM 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 AMAZONCOM will offset losses from the drop in AMAZONCOM's long position.| Caterpillar vs. AGCO Corporation | Caterpillar vs. Nikola Corp | Caterpillar vs. PACCAR Inc | Caterpillar vs. Deere Company |
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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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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