Correlation Between ATT and CATERPILLAR
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By analyzing existing cross correlation between ATT Inc and CATERPILLAR INC 53, you can compare the effects of market volatilities on ATT and CATERPILLAR 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 ATT with a short position of CATERPILLAR. Check out your portfolio center. Please also check ongoing floating volatility patterns of ATT and CATERPILLAR.
Diversification Opportunities for ATT and CATERPILLAR
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between ATT and CATERPILLAR is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding ATT Inc and CATERPILLAR INC 53 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CATERPILLAR INC 53 and ATT 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 ATT Inc are associated (or correlated) with CATERPILLAR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CATERPILLAR INC 53 has no effect on the direction of ATT i.e., ATT and CATERPILLAR go up and down completely randomly.
Pair Corralation between ATT and CATERPILLAR
Taking into account the 90-day investment horizon ATT Inc is expected to generate 1.4 times more return on investment than CATERPILLAR. However, ATT is 1.4 times more volatile than CATERPILLAR INC 53. It trades about 0.05 of its potential returns per unit of risk. CATERPILLAR INC 53 is currently generating about 0.0 per unit of risk. If you would invest 1,668 in ATT Inc on September 4, 2024 and sell it today you would earn a total of 602.00 from holding ATT Inc or generate 36.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 55.96% |
| Values | Daily Returns |
ATT Inc vs. CATERPILLAR INC 53
Performance |
| Timeline |
| ATT Inc |
| CATERPILLAR INC 53 |
ATT and CATERPILLAR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ATT and CATERPILLAR
The main advantage of trading using opposite ATT and CATERPILLAR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ATT position performs unexpectedly, CATERPILLAR 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 CATERPILLAR will offset losses from the drop in CATERPILLAR's long position.The idea behind ATT Inc and CATERPILLAR INC 53 pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| CATERPILLAR vs. The Travelers Companies | CATERPILLAR vs. GE Aerospace | CATERPILLAR vs. Walmart | CATERPILLAR vs. Pfizer Inc |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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