Correlation Between Caterpillar and BERKSHIRE
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By analyzing existing cross correlation between Caterpillar and BERKSHIRE HATHAWAY INC, you can compare the effects of market volatilities on Caterpillar and BERKSHIRE 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 BERKSHIRE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caterpillar and BERKSHIRE.
Diversification Opportunities for Caterpillar and BERKSHIRE
-0.73 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Caterpillar and BERKSHIRE is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Caterpillar and BERKSHIRE HATHAWAY INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BERKSHIRE HATHAWAY 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 BERKSHIRE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BERKSHIRE HATHAWAY INC has no effect on the direction of Caterpillar i.e., Caterpillar and BERKSHIRE go up and down completely randomly.
Pair Corralation between Caterpillar and BERKSHIRE
Considering the 90-day investment horizon Caterpillar is expected to generate 2.21 times more return on investment than BERKSHIRE. However, Caterpillar is 2.21 times more volatile than BERKSHIRE HATHAWAY INC. It trades about 0.09 of its potential returns per unit of risk. BERKSHIRE HATHAWAY INC is currently generating about 0.1 per unit of risk. If you would invest 38,751 in Caterpillar on August 30, 2024 and sell it today you would earn a total of 1,619 from holding Caterpillar or generate 4.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Caterpillar vs. BERKSHIRE HATHAWAY INC
Performance |
| Timeline |
| Caterpillar |
| BERKSHIRE HATHAWAY INC |
Caterpillar and BERKSHIRE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caterpillar and BERKSHIRE
The main advantage of trading using opposite Caterpillar and BERKSHIRE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caterpillar position performs unexpectedly, BERKSHIRE 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 BERKSHIRE will offset losses from the drop in BERKSHIRE's long position.| Caterpillar vs. AGCO Corporation | Caterpillar vs. Nikola Corp | Caterpillar vs. PACCAR Inc | Caterpillar vs. Deere Company |
| BERKSHIRE vs. Ameriprise Financial | BERKSHIRE vs. Royalty Management Holding | BERKSHIRE vs. Boston Beer | BERKSHIRE vs. Willamette Valley Vineyards |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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