Correlation Between Caterpillar and 404280CF4
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By analyzing existing cross correlation between Caterpillar and HSBC HOLDINGS PLC, you can compare the effects of market volatilities on Caterpillar and 404280CF4 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 404280CF4. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caterpillar and 404280CF4.
Diversification Opportunities for Caterpillar and 404280CF4
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Caterpillar and 404280CF4 is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Caterpillar and HSBC HOLDINGS PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HSBC HOLDINGS PLC 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 404280CF4. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HSBC HOLDINGS PLC has no effect on the direction of Caterpillar i.e., Caterpillar and 404280CF4 go up and down completely randomly.
Pair Corralation between Caterpillar and 404280CF4
Considering the 90-day investment horizon Caterpillar is expected to generate 3.38 times more return on investment than 404280CF4. However, Caterpillar is 3.38 times more volatile than HSBC HOLDINGS PLC. It trades about 0.1 of its potential returns per unit of risk. HSBC HOLDINGS PLC is currently generating about 0.01 per unit of risk. If you would invest 21,675 in Caterpillar on August 27, 2024 and sell it today you would earn a total of 18,074 from holding Caterpillar or generate 83.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 97.32% |
| Values | Daily Returns |
Caterpillar vs. HSBC HOLDINGS PLC
Performance |
| Timeline |
| Caterpillar |
| HSBC HOLDINGS PLC |
Caterpillar and 404280CF4 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caterpillar and 404280CF4
The main advantage of trading using opposite Caterpillar and 404280CF4 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caterpillar position performs unexpectedly, 404280CF4 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 404280CF4 will offset losses from the drop in 404280CF4's long position.| Caterpillar vs. Lion Electric Corp | Caterpillar vs. Xos Inc | Caterpillar vs. Hydrofarm Holdings Group | Caterpillar vs. AGCO Corporation |
| 404280CF4 vs. PennantPark Floating Rate | 404280CF4 vs. Ecoloclean Industrs | 404280CF4 vs. CVW CleanTech | 404280CF4 vs. Viemed Healthcare |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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