Correlation Between Caterpillar and NORTHERN
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By analyzing existing cross correlation between Caterpillar and NORTHERN TRUST PORATION, you can compare the effects of market volatilities on Caterpillar and NORTHERN 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 NORTHERN. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caterpillar and NORTHERN.
Diversification Opportunities for Caterpillar and NORTHERN
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Caterpillar and NORTHERN is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Caterpillar and NORTHERN TRUST PORATION in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NORTHERN TRUST PORATION 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 NORTHERN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NORTHERN TRUST PORATION has no effect on the direction of Caterpillar i.e., Caterpillar and NORTHERN go up and down completely randomly.
Pair Corralation between Caterpillar and NORTHERN
Considering the 90-day investment horizon Caterpillar is expected to generate 2.99 times more return on investment than NORTHERN. However, Caterpillar is 2.99 times more volatile than NORTHERN TRUST PORATION. It trades about 0.08 of its potential returns per unit of risk. NORTHERN TRUST PORATION is currently generating about -0.01 per unit of risk. If you would invest 22,712 in Caterpillar on September 3, 2024 and sell it today you would earn a total of 17,899 from holding Caterpillar or generate 78.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.19% |
| Values | Daily Returns |
Caterpillar vs. NORTHERN TRUST PORATION
Performance |
| Timeline |
| Caterpillar |
| NORTHERN TRUST PORATION |
Caterpillar and NORTHERN Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caterpillar and NORTHERN
The main advantage of trading using opposite Caterpillar and NORTHERN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caterpillar position performs unexpectedly, NORTHERN 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 NORTHERN will offset losses from the drop in NORTHERN's long position.| Caterpillar vs. Partner Communications | Caterpillar vs. Merck Company | Caterpillar vs. Western Midstream Partners | Caterpillar vs. Edgewise Therapeutics |
| NORTHERN vs. Allient | NORTHERN vs. Radcom | NORTHERN vs. Corporacion America Airports | NORTHERN vs. Paysafe |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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