Correlation Between Caterpillar and 88579YAR2
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By analyzing existing cross correlation between Caterpillar and 3M 3 percent, you can compare the effects of market volatilities on Caterpillar and 88579YAR2 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 88579YAR2. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caterpillar and 88579YAR2.
Diversification Opportunities for Caterpillar and 88579YAR2
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Caterpillar and 88579YAR2 is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Caterpillar and 3M 3 percent in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 3M 3 percent 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 88579YAR2. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 3M 3 percent has no effect on the direction of Caterpillar i.e., Caterpillar and 88579YAR2 go up and down completely randomly.
Pair Corralation between Caterpillar and 88579YAR2
Considering the 90-day investment horizon Caterpillar is expected to generate 6.0 times more return on investment than 88579YAR2. However, Caterpillar is 6.0 times more volatile than 3M 3 percent. It trades about 0.05 of its potential returns per unit of risk. 3M 3 percent is currently generating about 0.01 per unit of risk. If you would invest 35,975 in Caterpillar on November 9, 2024 and sell it today you would earn a total of 570.00 from holding Caterpillar or generate 1.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Caterpillar vs. 3M 3 percent
Performance |
| Timeline |
| Caterpillar |
| 3M 3 percent |
Caterpillar and 88579YAR2 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caterpillar and 88579YAR2
The main advantage of trading using opposite Caterpillar and 88579YAR2 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caterpillar position performs unexpectedly, 88579YAR2 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 88579YAR2 will offset losses from the drop in 88579YAR2's long position.| Caterpillar vs. AGCO Corporation | Caterpillar vs. Nikola Corp | Caterpillar vs. PACCAR Inc | Caterpillar vs. Deere Company |
| 88579YAR2 vs. Mattel Inc | 88579YAR2 vs. BRP Inc | 88579YAR2 vs. Allegion PLC | 88579YAR2 vs. Emerson Electric |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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