Correlation Between Caterpillar and MASSACHUSETTS
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By analyzing existing cross correlation between Caterpillar and MASSACHUSETTS INST TECHNOLOGY, you can compare the effects of market volatilities on Caterpillar and MASSACHUSETTS 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 MASSACHUSETTS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caterpillar and MASSACHUSETTS.
Diversification Opportunities for Caterpillar and MASSACHUSETTS
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Caterpillar and MASSACHUSETTS is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Caterpillar and MASSACHUSETTS INST TECHNOLOGY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MASSACHUSETTS INST 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 MASSACHUSETTS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MASSACHUSETTS INST has no effect on the direction of Caterpillar i.e., Caterpillar and MASSACHUSETTS go up and down completely randomly.
Pair Corralation between Caterpillar and MASSACHUSETTS
Considering the 90-day investment horizon Caterpillar is expected to generate 1.28 times more return on investment than MASSACHUSETTS. However, Caterpillar is 1.28 times more volatile than MASSACHUSETTS INST TECHNOLOGY. It trades about 0.16 of its potential returns per unit of risk. MASSACHUSETTS INST TECHNOLOGY is currently generating about 0.18 per unit of risk. If you would invest 37,620 in Caterpillar on September 1, 2024 and sell it today you would earn a total of 2,991 from holding Caterpillar or generate 7.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Caterpillar vs. MASSACHUSETTS INST TECHNOLOGY
Performance |
| Timeline |
| Caterpillar |
| MASSACHUSETTS INST |
Caterpillar and MASSACHUSETTS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caterpillar and MASSACHUSETTS
The main advantage of trading using opposite Caterpillar and MASSACHUSETTS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caterpillar position performs unexpectedly, MASSACHUSETTS 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 MASSACHUSETTS will offset losses from the drop in MASSACHUSETTS's long position.| Caterpillar vs. AGCO Corporation | Caterpillar vs. Nikola Corp | Caterpillar vs. PACCAR Inc | Caterpillar vs. Deere Company |
| MASSACHUSETTS vs. AEP TEX INC | MASSACHUSETTS vs. US BANK NATIONAL | MASSACHUSETTS vs. Bank of America | MASSACHUSETTS vs. GE Aerospace |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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