Correlation Between Caterpillar and ECOLAB
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By analyzing existing cross correlation between Caterpillar and ECOLAB INC 325, you can compare the effects of market volatilities on Caterpillar and ECOLAB 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 ECOLAB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caterpillar and ECOLAB.
Diversification Opportunities for Caterpillar and ECOLAB
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Caterpillar and ECOLAB is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Caterpillar and ECOLAB INC 325 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ECOLAB INC 325 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 ECOLAB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ECOLAB INC 325 has no effect on the direction of Caterpillar i.e., Caterpillar and ECOLAB go up and down completely randomly.
Pair Corralation between Caterpillar and ECOLAB
Considering the 90-day investment horizon Caterpillar is expected to generate 17.51 times less return on investment than ECOLAB. But when comparing it to its historical volatility, Caterpillar is 29.54 times less risky than ECOLAB. It trades about 0.08 of its potential returns per unit of risk. ECOLAB INC 325 is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 9,460 in ECOLAB INC 325 on September 3, 2024 and sell it today you would earn a total of 98.00 from holding ECOLAB INC 325 or generate 1.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 78.59% |
| Values | Daily Returns |
Caterpillar vs. ECOLAB INC 325
Performance |
| Timeline |
| Caterpillar |
| ECOLAB INC 325 |
Caterpillar and ECOLAB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caterpillar and ECOLAB
The main advantage of trading using opposite Caterpillar and ECOLAB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caterpillar position performs unexpectedly, ECOLAB 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 ECOLAB will offset losses from the drop in ECOLAB's long position.| Caterpillar vs. Partner Communications | Caterpillar vs. Merck Company | Caterpillar vs. Western Midstream Partners | Caterpillar vs. Edgewise Therapeutics |
| ECOLAB vs. Glacier Bancorp | ECOLAB vs. AmTrust Financial Services | ECOLAB vs. Fomento Economico Mexicano | ECOLAB vs. Suntory Beverage Food |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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