Correlation Between Caterpillar and 88579EAC9
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By analyzing existing cross correlation between Caterpillar and 3M MEDIUM TERM, you can compare the effects of market volatilities on Caterpillar and 88579EAC9 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 88579EAC9. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caterpillar and 88579EAC9.
Diversification Opportunities for Caterpillar and 88579EAC9
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Caterpillar and 88579EAC9 is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Caterpillar and 3M MEDIUM TERM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 3M MEDIUM TERM 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 88579EAC9. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 3M MEDIUM TERM has no effect on the direction of Caterpillar i.e., Caterpillar and 88579EAC9 go up and down completely randomly.
Pair Corralation between Caterpillar and 88579EAC9
Considering the 90-day investment horizon Caterpillar is expected to generate 1.52 times less return on investment than 88579EAC9. In addition to that, Caterpillar is 1.96 times more volatile than 3M MEDIUM TERM. It trades about 0.05 of its total potential returns per unit of risk. 3M MEDIUM TERM is currently generating about 0.14 per unit of volatility. If you would invest 10,125 in 3M MEDIUM TERM on November 9, 2024 and sell it today you would earn a total of 305.00 from holding 3M MEDIUM TERM or generate 3.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Caterpillar vs. 3M MEDIUM TERM
Performance |
| Timeline |
| Caterpillar |
| 3M MEDIUM TERM |
Caterpillar and 88579EAC9 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caterpillar and 88579EAC9
The main advantage of trading using opposite Caterpillar and 88579EAC9 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caterpillar position performs unexpectedly, 88579EAC9 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 88579EAC9 will offset losses from the drop in 88579EAC9's long position.| Caterpillar vs. AGCO Corporation | Caterpillar vs. Nikola Corp | Caterpillar vs. PACCAR Inc | Caterpillar vs. Deere Company |
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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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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