Correlation Between Caterpillar and 037389BE2
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By analyzing existing cross correlation between Caterpillar and AON P, you can compare the effects of market volatilities on Caterpillar and 037389BE2 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 037389BE2. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caterpillar and 037389BE2.
Diversification Opportunities for Caterpillar and 037389BE2
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Caterpillar and 037389BE2 is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Caterpillar and AON P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 037389BE2 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 037389BE2. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 037389BE2 has no effect on the direction of Caterpillar i.e., Caterpillar and 037389BE2 go up and down completely randomly.
Pair Corralation between Caterpillar and 037389BE2
Considering the 90-day investment horizon Caterpillar is expected to generate 3.81 times more return on investment than 037389BE2. However, Caterpillar is 3.81 times more volatile than AON P. It trades about 0.09 of its potential returns per unit of risk. AON P is currently generating about -0.15 per unit of risk. If you would invest 39,061 in Caterpillar on August 29, 2024 and sell it today you would earn a total of 1,722 from holding Caterpillar or generate 4.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Caterpillar vs. AON P
Performance |
| Timeline |
| Caterpillar |
| 037389BE2 |
Caterpillar and 037389BE2 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caterpillar and 037389BE2
The main advantage of trading using opposite Caterpillar and 037389BE2 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caterpillar position performs unexpectedly, 037389BE2 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 037389BE2 will offset losses from the drop in 037389BE2's long position.| Caterpillar vs. AGCO Corporation | Caterpillar vs. Nikola Corp | Caterpillar vs. PACCAR Inc | Caterpillar vs. Deere Company |
| 037389BE2 vs. PennantPark Floating Rate | 037389BE2 vs. Sabra Healthcare REIT | 037389BE2 vs. Hannon Armstrong Sustainable | 037389BE2 vs. Trupanion |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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