Correlation Between 00108WAF7 and Caterpillar
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By analyzing existing cross correlation between AEP TEX INC and Caterpillar, you can compare the effects of market volatilities on 00108WAF7 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 00108WAF7 with a short position of Caterpillar. Check out your portfolio center. Please also check ongoing floating volatility patterns of 00108WAF7 and Caterpillar.
Diversification Opportunities for 00108WAF7 and Caterpillar
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between 00108WAF7 and Caterpillar is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding AEP TEX INC and Caterpillar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caterpillar and 00108WAF7 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 AEP TEX 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 has no effect on the direction of 00108WAF7 i.e., 00108WAF7 and Caterpillar go up and down completely randomly.
Pair Corralation between 00108WAF7 and Caterpillar
Assuming the 90 days trading horizon AEP TEX INC is expected to generate 90.06 times more return on investment than Caterpillar. However, 00108WAF7 is 90.06 times more volatile than Caterpillar. It trades about 0.14 of its potential returns per unit of risk. Caterpillar is currently generating about 0.11 per unit of risk. If you would invest 7,625 in AEP TEX INC on August 31, 2024 and sell it today you would lose (536.00) from holding AEP TEX INC or give up 7.03% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 62.94% |
| Values | Daily Returns |
AEP TEX INC vs. Caterpillar
Performance |
| Timeline |
| AEP TEX INC |
| Caterpillar |
00108WAF7 and Caterpillar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with 00108WAF7 and Caterpillar
The main advantage of trading using opposite 00108WAF7 and Caterpillar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 00108WAF7 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.| 00108WAF7 vs. Asure Software | 00108WAF7 vs. Casio Computer Co | 00108WAF7 vs. Haverty Furniture Companies | 00108WAF7 vs. SL Green Realty |
| Caterpillar vs. Deere Company | Caterpillar vs. Lindsay | Caterpillar vs. Alamo Group | Caterpillar vs. Manitowoc |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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