Correlation Between Caterpillar and 459200KX8
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By analyzing existing cross correlation between Caterpillar and IBM 45 06 FEB 28, you can compare the effects of market volatilities on Caterpillar and 459200KX8 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 459200KX8. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caterpillar and 459200KX8.
Diversification Opportunities for Caterpillar and 459200KX8
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Caterpillar and 459200KX8 is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Caterpillar and IBM 45 06 FEB 28 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IBM 45 06 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 459200KX8. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IBM 45 06 has no effect on the direction of Caterpillar i.e., Caterpillar and 459200KX8 go up and down completely randomly.
Pair Corralation between Caterpillar and 459200KX8
Considering the 90-day investment horizon Caterpillar is expected to generate 9.44 times more return on investment than 459200KX8. However, Caterpillar is 9.44 times more volatile than IBM 45 06 FEB 28. It trades about 0.09 of its potential returns per unit of risk. IBM 45 06 FEB 28 is currently generating about 0.13 per unit of risk. If you would invest 39,061 in Caterpillar on August 29, 2024 and sell it today you would earn a total of 1,722 from holding Caterpillar or generate 4.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Caterpillar vs. IBM 45 06 FEB 28
Performance |
| Timeline |
| Caterpillar |
| IBM 45 06 |
Caterpillar and 459200KX8 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caterpillar and 459200KX8
The main advantage of trading using opposite Caterpillar and 459200KX8 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caterpillar position performs unexpectedly, 459200KX8 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 459200KX8 will offset losses from the drop in 459200KX8's long position.| Caterpillar vs. Lion Electric Corp | Caterpillar vs. Xos Inc | Caterpillar vs. Hydrofarm Holdings Group | Caterpillar vs. AGCO Corporation |
| 459200KX8 vs. Hawkins | 459200KX8 vs. Here Media | 459200KX8 vs. Avient Corp | 459200KX8 vs. Scandinavian Tobacco Group |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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