Correlation Between Caterpillar and UNITED
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By analyzing existing cross correlation between Caterpillar and UNITED TECHNOLOGIES P, you can compare the effects of market volatilities on Caterpillar and UNITED 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 UNITED. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caterpillar and UNITED.
Diversification Opportunities for Caterpillar and UNITED
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Caterpillar and UNITED is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Caterpillar and UNITED TECHNOLOGIES P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UNITED TECHNOLOGIES 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 UNITED. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UNITED TECHNOLOGIES has no effect on the direction of Caterpillar i.e., Caterpillar and UNITED go up and down completely randomly.
Pair Corralation between Caterpillar and UNITED
Considering the 90-day investment horizon Caterpillar is expected to generate 2.35 times more return on investment than UNITED. However, Caterpillar is 2.35 times more volatile than UNITED TECHNOLOGIES P. It trades about 0.16 of its potential returns per unit of risk. UNITED TECHNOLOGIES P is currently generating about 0.04 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 Against |
| Strength | Very Weak |
| Accuracy | 96.88% |
| Values | Daily Returns |
Caterpillar vs. UNITED TECHNOLOGIES P
Performance |
| Timeline |
| Caterpillar |
| UNITED TECHNOLOGIES |
Caterpillar and UNITED Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caterpillar and UNITED
The main advantage of trading using opposite Caterpillar and UNITED positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caterpillar position performs unexpectedly, UNITED 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 UNITED will offset losses from the drop in UNITED'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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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