Correlation Between Caterpillar and CITIGROUP
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By analyzing existing cross correlation between Caterpillar and CITIGROUP INC 585, you can compare the effects of market volatilities on Caterpillar and CITIGROUP 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 CITIGROUP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caterpillar and CITIGROUP.
Diversification Opportunities for Caterpillar and CITIGROUP
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Caterpillar and CITIGROUP is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Caterpillar and CITIGROUP INC 585 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CITIGROUP INC 585 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 CITIGROUP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CITIGROUP INC 585 has no effect on the direction of Caterpillar i.e., Caterpillar and CITIGROUP go up and down completely randomly.
Pair Corralation between Caterpillar and CITIGROUP
Considering the 90-day investment horizon Caterpillar is expected to generate 2.07 times more return on investment than CITIGROUP. However, Caterpillar is 2.07 times more volatile than CITIGROUP INC 585. It trades about 0.09 of its potential returns per unit of risk. CITIGROUP INC 585 is currently generating about -0.21 per unit of risk. If you would invest 39,061 in Caterpillar on August 28, 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 Together |
| Strength | Weak |
| Accuracy | 50.0% |
| Values | Daily Returns |
Caterpillar vs. CITIGROUP INC 585
Performance |
| Timeline |
| Caterpillar |
| CITIGROUP INC 585 |
Caterpillar and CITIGROUP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caterpillar and CITIGROUP
The main advantage of trading using opposite Caterpillar and CITIGROUP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caterpillar position performs unexpectedly, CITIGROUP 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 CITIGROUP will offset losses from the drop in CITIGROUP's long position.| Caterpillar vs. Lion Electric Corp | Caterpillar vs. Xos Inc | Caterpillar vs. Hydrofarm Holdings Group | Caterpillar vs. AGCO Corporation |
| CITIGROUP vs. AEP TEX INC | CITIGROUP vs. US BANK NATIONAL | CITIGROUP vs. Eat Beyond Global | CITIGROUP vs. Charles Schwab Corp |
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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