Correlation Between Caterpillar and 279158AJ8
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By analyzing existing cross correlation between Caterpillar and ECOPETROL S A, you can compare the effects of market volatilities on Caterpillar and 279158AJ8 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 279158AJ8. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caterpillar and 279158AJ8.
Diversification Opportunities for Caterpillar and 279158AJ8
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Caterpillar and 279158AJ8 is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Caterpillar and ECOPETROL S A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ECOPETROL S A 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 279158AJ8. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ECOPETROL S A has no effect on the direction of Caterpillar i.e., Caterpillar and 279158AJ8 go up and down completely randomly.
Pair Corralation between Caterpillar and 279158AJ8
Considering the 90-day investment horizon Caterpillar is expected to generate 1.15 times more return on investment than 279158AJ8. However, Caterpillar is 1.15 times more volatile than ECOPETROL S A. It trades about 0.04 of its potential returns per unit of risk. ECOPETROL S A is currently generating about -0.01 per unit of risk. If you would invest 36,928 in Caterpillar on September 3, 2024 and sell it today you would earn a total of 3,683 from holding Caterpillar or generate 9.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 98.19% |
| Values | Daily Returns |
Caterpillar vs. ECOPETROL S A
Performance |
| Timeline |
| Caterpillar |
| ECOPETROL S A |
Caterpillar and 279158AJ8 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caterpillar and 279158AJ8
The main advantage of trading using opposite Caterpillar and 279158AJ8 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caterpillar position performs unexpectedly, 279158AJ8 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 279158AJ8 will offset losses from the drop in 279158AJ8's long position.| Caterpillar vs. Partner Communications | Caterpillar vs. Merck Company | Caterpillar vs. Western Midstream Partners | Caterpillar vs. Edgewise Therapeutics |
| 279158AJ8 vs. The Travelers Companies | 279158AJ8 vs. GE Aerospace | 279158AJ8 vs. Walmart | 279158AJ8 vs. Pfizer Inc |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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