Correlation Between Caterpillar and Charles
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By analyzing existing cross correlation between Caterpillar and Charles River Laboratories, you can compare the effects of market volatilities on Caterpillar and Charles 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 Charles. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caterpillar and Charles.
Diversification Opportunities for Caterpillar and Charles
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Caterpillar and Charles is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Caterpillar and Charles River Laboratories in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Charles River Labora 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 Charles. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Charles River Labora has no effect on the direction of Caterpillar i.e., Caterpillar and Charles go up and down completely randomly.
Pair Corralation between Caterpillar and Charles
Considering the 90-day investment horizon Caterpillar is expected to generate 5.2 times more return on investment than Charles. However, Caterpillar is 5.2 times more volatile than Charles River Laboratories. It trades about 0.15 of its potential returns per unit of risk. Charles River Laboratories is currently generating about -0.04 per unit of risk. If you would invest 37,963 in Caterpillar on September 2, 2024 and sell it today you would earn a total of 2,648 from holding Caterpillar or generate 6.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 90.48% |
| Values | Daily Returns |
Caterpillar vs. Charles River Laboratories
Performance |
| Timeline |
| Caterpillar |
| Charles River Labora |
Caterpillar and Charles Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caterpillar and Charles
The main advantage of trading using opposite Caterpillar and Charles positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caterpillar position performs unexpectedly, Charles 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 Charles will offset losses from the drop in Charles' long position.| Caterpillar vs. AGCO Corporation | Caterpillar vs. Nikola Corp | Caterpillar vs. PACCAR Inc | Caterpillar vs. Deere Company |
| Charles vs. AEP TEX INC | Charles vs. US BANK NATIONAL | Charles vs. Bank of America | Charles vs. GE Aerospace |
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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