Correlation Between Caterpillar and EQUINOR
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By analyzing existing cross correlation between Caterpillar and EQUINOR ASA, you can compare the effects of market volatilities on Caterpillar and EQUINOR 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 EQUINOR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caterpillar and EQUINOR.
Diversification Opportunities for Caterpillar and EQUINOR
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between Caterpillar and EQUINOR is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Caterpillar and EQUINOR ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EQUINOR ASA 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 EQUINOR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EQUINOR ASA has no effect on the direction of Caterpillar i.e., Caterpillar and EQUINOR go up and down completely randomly.
Pair Corralation between Caterpillar and EQUINOR
Considering the 90-day investment horizon Caterpillar is expected to generate 10.53 times more return on investment than EQUINOR. However, Caterpillar is 10.53 times more volatile than EQUINOR ASA. It trades about 0.07 of its potential returns per unit of risk. EQUINOR ASA is currently generating about 0.07 per unit of risk. If you would invest 28,166 in Caterpillar on November 9, 2024 and sell it today you would earn a total of 8,379 from holding Caterpillar or generate 29.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.25% |
| Values | Daily Returns |
Caterpillar vs. EQUINOR ASA
Performance |
| Timeline |
| Caterpillar |
| EQUINOR ASA |
Caterpillar and EQUINOR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caterpillar and EQUINOR
The main advantage of trading using opposite Caterpillar and EQUINOR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caterpillar position performs unexpectedly, EQUINOR 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 EQUINOR will offset losses from the drop in EQUINOR's long position.| Caterpillar vs. AGCO Corporation | Caterpillar vs. Nikola Corp | Caterpillar vs. PACCAR Inc | Caterpillar vs. Deere Company |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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