Correlation Between Caterpillar and 88579YBK6
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By analyzing existing cross correlation between Caterpillar and 3M CO, you can compare the effects of market volatilities on Caterpillar and 88579YBK6 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 88579YBK6. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caterpillar and 88579YBK6.
Diversification Opportunities for Caterpillar and 88579YBK6
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Caterpillar and 88579YBK6 is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Caterpillar and 3M CO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 88579YBK6 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 88579YBK6. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 88579YBK6 has no effect on the direction of Caterpillar i.e., Caterpillar and 88579YBK6 go up and down completely randomly.
Pair Corralation between Caterpillar and 88579YBK6
Considering the 90-day investment horizon Caterpillar is expected to generate 14.17 times less return on investment than 88579YBK6. But when comparing it to its historical volatility, Caterpillar is 26.71 times less risky than 88579YBK6. It trades about 0.08 of its potential returns per unit of risk. 3M CO is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 7,601 in 3M CO on September 3, 2024 and sell it today you would lose (654.00) from holding 3M CO or give up 8.6% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 96.16% |
| Values | Daily Returns |
Caterpillar vs. 3M CO
Performance |
| Timeline |
| Caterpillar |
| 88579YBK6 |
Caterpillar and 88579YBK6 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caterpillar and 88579YBK6
The main advantage of trading using opposite Caterpillar and 88579YBK6 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caterpillar position performs unexpectedly, 88579YBK6 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 88579YBK6 will offset losses from the drop in 88579YBK6's long position.| Caterpillar vs. Partner Communications | Caterpillar vs. Merck Company | Caterpillar vs. Western Midstream Partners | Caterpillar vs. Edgewise Therapeutics |
| 88579YBK6 vs. Datadog | 88579YBK6 vs. Joint Stock | 88579YBK6 vs. MGIC Investment Corp | 88579YBK6 vs. Western Asset Investment |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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