Correlation Between Caterpillar and 37940XAQ5
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By analyzing existing cross correlation between Caterpillar and GPN 54 15 AUG 32, you can compare the effects of market volatilities on Caterpillar and 37940XAQ5 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 37940XAQ5. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caterpillar and 37940XAQ5.
Diversification Opportunities for Caterpillar and 37940XAQ5
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Caterpillar and 37940XAQ5 is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Caterpillar and GPN 54 15 AUG 32 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GPN 54 15 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 37940XAQ5. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GPN 54 15 has no effect on the direction of Caterpillar i.e., Caterpillar and 37940XAQ5 go up and down completely randomly.
Pair Corralation between Caterpillar and 37940XAQ5
Considering the 90-day investment horizon Caterpillar is expected to generate 3.15 times more return on investment than 37940XAQ5. However, Caterpillar is 3.15 times more volatile than GPN 54 15 AUG 32. It trades about 0.06 of its potential returns per unit of risk. GPN 54 15 AUG 32 is currently generating about 0.02 per unit of risk. If you would invest 23,129 in Caterpillar on November 19, 2024 and sell it today you would earn a total of 12,203 from holding Caterpillar or generate 52.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.77% |
| Values | Daily Returns |
Caterpillar vs. GPN 54 15 AUG 32
Performance |
| Timeline |
| Caterpillar |
| GPN 54 15 |
Caterpillar and 37940XAQ5 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caterpillar and 37940XAQ5
The main advantage of trading using opposite Caterpillar and 37940XAQ5 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caterpillar position performs unexpectedly, 37940XAQ5 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 37940XAQ5 will offset losses from the drop in 37940XAQ5'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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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