Correlation Between Caterpillar and 437076CG5
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By analyzing existing cross correlation between Caterpillar and HOME DEPOT INC, you can compare the effects of market volatilities on Caterpillar and 437076CG5 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 437076CG5. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caterpillar and 437076CG5.
Diversification Opportunities for Caterpillar and 437076CG5
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Caterpillar and 437076CG5 is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Caterpillar and HOME DEPOT INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HOME DEPOT INC 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 437076CG5. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HOME DEPOT INC has no effect on the direction of Caterpillar i.e., Caterpillar and 437076CG5 go up and down completely randomly.
Pair Corralation between Caterpillar and 437076CG5
Considering the 90-day investment horizon Caterpillar is expected to generate 1.04 times more return on investment than 437076CG5. However, Caterpillar is 1.04 times more volatile than HOME DEPOT INC. It trades about 0.28 of its potential returns per unit of risk. HOME DEPOT INC is currently generating about -0.15 per unit of risk. If you would invest 35,846 in Caterpillar on November 2, 2024 and sell it today you would earn a total of 3,477 from holding Caterpillar or generate 9.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.0% |
| Values | Daily Returns |
Caterpillar vs. HOME DEPOT INC
Performance |
| Timeline |
| Caterpillar |
| HOME DEPOT INC |
Caterpillar and 437076CG5 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caterpillar and 437076CG5
The main advantage of trading using opposite Caterpillar and 437076CG5 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caterpillar position performs unexpectedly, 437076CG5 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 437076CG5 will offset losses from the drop in 437076CG5's long position.| Caterpillar vs. AGCO Corporation | Caterpillar vs. Nikola Corp | Caterpillar vs. PACCAR Inc | Caterpillar vs. Deere Company |
| 437076CG5 vs. Alaska Air Group | 437076CG5 vs. Mesa Air Group | 437076CG5 vs. Altair Engineering | 437076CG5 vs. Victorias Secret Co |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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