Correlation Between Caterpillar and TELUS
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By analyzing existing cross correlation between Caterpillar and TELUS P 37, you can compare the effects of market volatilities on Caterpillar and TELUS 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 TELUS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caterpillar and TELUS.
Diversification Opportunities for Caterpillar and TELUS
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Caterpillar and TELUS is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Caterpillar and TELUS P 37 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TELUS P 37 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 TELUS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TELUS P 37 has no effect on the direction of Caterpillar i.e., Caterpillar and TELUS go up and down completely randomly.
Pair Corralation between Caterpillar and TELUS
Considering the 90-day investment horizon Caterpillar is expected to generate 2.26 times more return on investment than TELUS. However, Caterpillar is 2.26 times more volatile than TELUS P 37. It trades about 0.16 of its potential returns per unit of risk. TELUS P 37 is currently generating about -0.12 per unit of risk. If you would invest 33,902 in Caterpillar on September 2, 2024 and sell it today you would earn a total of 6,709 from holding Caterpillar or generate 19.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 62.5% |
| Values | Daily Returns |
Caterpillar vs. TELUS P 37
Performance |
| Timeline |
| Caterpillar |
| TELUS P 37 |
Caterpillar and TELUS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caterpillar and TELUS
The main advantage of trading using opposite Caterpillar and TELUS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caterpillar position performs unexpectedly, TELUS 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 TELUS will offset losses from the drop in TELUS's long position.| Caterpillar vs. AGCO Corporation | Caterpillar vs. Nikola Corp | Caterpillar vs. PACCAR Inc | Caterpillar vs. Deere Company |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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