Correlation Between Caterpillar and KINDER
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By analyzing existing cross correlation between Caterpillar and KINDER MORGAN ENERGY, you can compare the effects of market volatilities on Caterpillar and KINDER 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 KINDER. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caterpillar and KINDER.
Diversification Opportunities for Caterpillar and KINDER
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Caterpillar and KINDER is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Caterpillar and KINDER MORGAN ENERGY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KINDER MORGAN ENERGY 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 KINDER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KINDER MORGAN ENERGY has no effect on the direction of Caterpillar i.e., Caterpillar and KINDER go up and down completely randomly.
Pair Corralation between Caterpillar and KINDER
Considering the 90-day investment horizon Caterpillar is expected to generate 45.2 times less return on investment than KINDER. But when comparing it to its historical volatility, Caterpillar is 47.38 times less risky than KINDER. It trades about 0.08 of its potential returns per unit of risk. KINDER MORGAN ENERGY is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 11,065 in KINDER MORGAN ENERGY on September 3, 2024 and sell it today you would earn a total of 22.00 from holding KINDER MORGAN ENERGY or generate 0.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 91.31% |
| Values | Daily Returns |
Caterpillar vs. KINDER MORGAN ENERGY
Performance |
| Timeline |
| Caterpillar |
| KINDER MORGAN ENERGY |
Caterpillar and KINDER Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caterpillar and KINDER
The main advantage of trading using opposite Caterpillar and KINDER positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caterpillar position performs unexpectedly, KINDER 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 KINDER will offset losses from the drop in KINDER's long position.| Caterpillar vs. Partner Communications | Caterpillar vs. Merck Company | Caterpillar vs. Western Midstream Partners | Caterpillar vs. Edgewise Therapeutics |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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