Correlation Between Caterpillar and DEERE
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By analyzing existing cross correlation between Caterpillar and DEERE 5375 percent, you can compare the effects of market volatilities on Caterpillar and DEERE 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 DEERE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caterpillar and DEERE.
Diversification Opportunities for Caterpillar and DEERE
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Caterpillar and DEERE is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Caterpillar and DEERE 5375 percent in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DEERE 5375 percent 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 DEERE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DEERE 5375 percent has no effect on the direction of Caterpillar i.e., Caterpillar and DEERE go up and down completely randomly.
Pair Corralation between Caterpillar and DEERE
Considering the 90-day investment horizon Caterpillar is expected to under-perform the DEERE. In addition to that, Caterpillar is 4.0 times more volatile than DEERE 5375 percent. It trades about -0.44 of its total potential returns per unit of risk. DEERE 5375 percent is currently generating about 0.22 per unit of volatility. If you would invest 10,334 in DEERE 5375 percent on November 28, 2024 and sell it today you would earn a total of 186.00 from holding DEERE 5375 percent or generate 1.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Caterpillar vs. DEERE 5375 percent
Performance |
| Timeline |
| Caterpillar |
| DEERE 5375 percent |
Caterpillar and DEERE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caterpillar and DEERE
The main advantage of trading using opposite Caterpillar and DEERE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caterpillar position performs unexpectedly, DEERE 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 DEERE will offset losses from the drop in DEERE's long position.| Caterpillar vs. Aquagold International | Caterpillar vs. Thrivent High Yield | Caterpillar vs. Morningstar Unconstrained Allocation | Caterpillar vs. Via Renewables |
| DEERE vs. United Guardian | DEERE vs. Mills Music Trust | DEERE vs. AKITA Drilling | DEERE vs. World Houseware Limited |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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