Correlation Between Caterpillar and WESTLAKE
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By analyzing existing cross correlation between Caterpillar and WESTLAKE CHEM P, you can compare the effects of market volatilities on Caterpillar and WESTLAKE 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 WESTLAKE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caterpillar and WESTLAKE.
Diversification Opportunities for Caterpillar and WESTLAKE
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Caterpillar and WESTLAKE is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Caterpillar and WESTLAKE CHEM P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WESTLAKE CHEM P 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 WESTLAKE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WESTLAKE CHEM P has no effect on the direction of Caterpillar i.e., Caterpillar and WESTLAKE go up and down completely randomly.
Pair Corralation between Caterpillar and WESTLAKE
Considering the 90-day investment horizon Caterpillar is expected to generate 31.03 times less return on investment than WESTLAKE. But when comparing it to its historical volatility, Caterpillar is 37.75 times less risky than WESTLAKE. It trades about 0.07 of its potential returns per unit of risk. WESTLAKE CHEM P is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 8,657 in WESTLAKE CHEM P on November 27, 2024 and sell it today you would earn a total of 181.00 from holding WESTLAKE CHEM P or generate 2.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 52.44% |
| Values | Daily Returns |
Caterpillar vs. WESTLAKE CHEM P
Performance |
| Timeline |
| Caterpillar |
| WESTLAKE CHEM P |
Caterpillar and WESTLAKE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caterpillar and WESTLAKE
The main advantage of trading using opposite Caterpillar and WESTLAKE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caterpillar position performs unexpectedly, WESTLAKE 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 WESTLAKE will offset losses from the drop in WESTLAKE's long position.| Caterpillar vs. Aquagold International | Caterpillar vs. Thrivent High Yield | Caterpillar vs. Morningstar Unconstrained Allocation | Caterpillar vs. Via Renewables |
| WESTLAKE vs. Aldel Financial II | WESTLAKE vs. EastGroup Properties | WESTLAKE vs. Inflection Point Acquisition | WESTLAKE vs. BJs Restaurants |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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