Correlation Between Caterpillar and 05565QDH8
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By analyzing existing cross correlation between Caterpillar and BP CAP MKTS, you can compare the effects of market volatilities on Caterpillar and 05565QDH8 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 05565QDH8. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caterpillar and 05565QDH8.
Diversification Opportunities for Caterpillar and 05565QDH8
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Caterpillar and 05565QDH8 is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Caterpillar and BP CAP MKTS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BP CAP MKTS 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 05565QDH8. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BP CAP MKTS has no effect on the direction of Caterpillar i.e., Caterpillar and 05565QDH8 go up and down completely randomly.
Pair Corralation between Caterpillar and 05565QDH8
Considering the 90-day investment horizon Caterpillar is expected to generate 2.4 times more return on investment than 05565QDH8. However, Caterpillar is 2.4 times more volatile than BP CAP MKTS. It trades about 0.13 of its potential returns per unit of risk. BP CAP MKTS is currently generating about -0.25 per unit of risk. If you would invest 37,924 in Caterpillar on August 31, 2024 and sell it today you would earn a total of 2,446 from holding Caterpillar or generate 6.45% 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. BP CAP MKTS
Performance |
| Timeline |
| Caterpillar |
| BP CAP MKTS |
Caterpillar and 05565QDH8 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caterpillar and 05565QDH8
The main advantage of trading using opposite Caterpillar and 05565QDH8 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caterpillar position performs unexpectedly, 05565QDH8 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 05565QDH8 will offset losses from the drop in 05565QDH8's long position.| Caterpillar vs. Deere Company | Caterpillar vs. Lindsay | Caterpillar vs. Alamo Group | Caterpillar vs. Manitowoc |
| 05565QDH8 vs. Postal Realty Trust | 05565QDH8 vs. Virco Manufacturing | 05565QDH8 vs. Wicket Gaming AB | 05565QDH8 vs. Playstudios |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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