Correlation Between CATERPILLAR and Iridium Communications
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By analyzing existing cross correlation between CATERPILLAR FINANCIAL SERVICES and Iridium Communications, you can compare the effects of market volatilities on CATERPILLAR and Iridium Communications 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 Iridium Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of CATERPILLAR and Iridium Communications.
Diversification Opportunities for CATERPILLAR and Iridium Communications
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between CATERPILLAR and Iridium is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding CATERPILLAR FINANCIAL SERVICES and Iridium Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Iridium Communications 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 FINANCIAL SERVICES are associated (or correlated) with Iridium Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Iridium Communications has no effect on the direction of CATERPILLAR i.e., CATERPILLAR and Iridium Communications go up and down completely randomly.
Pair Corralation between CATERPILLAR and Iridium Communications
Assuming the 90 days trading horizon CATERPILLAR FINANCIAL SERVICES is expected to generate 0.12 times more return on investment than Iridium Communications. However, CATERPILLAR FINANCIAL SERVICES is 8.28 times less risky than Iridium Communications. It trades about 0.01 of its potential returns per unit of risk. Iridium Communications is currently generating about -0.03 per unit of risk. If you would invest 8,969 in CATERPILLAR FINANCIAL SERVICES on September 12, 2024 and sell it today you would earn a total of 52.00 from holding CATERPILLAR FINANCIAL SERVICES or generate 0.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 96.16% |
| Values | Daily Returns |
CATERPILLAR FINANCIAL SERVICES vs. Iridium Communications
Performance |
| Timeline |
| CATERPILLAR FINANCIAL |
| Iridium Communications |
CATERPILLAR and Iridium Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CATERPILLAR and Iridium Communications
The main advantage of trading using opposite CATERPILLAR and Iridium Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CATERPILLAR position performs unexpectedly, Iridium Communications 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 Iridium Communications will offset losses from the drop in Iridium Communications' long position.| CATERPILLAR vs. Iridium Communications | CATERPILLAR vs. Inhibrx | CATERPILLAR vs. Sellas Life Sciences | CATERPILLAR vs. Apogee Therapeutics, Common |
| Iridium Communications vs. IHS Holding | Iridium Communications vs. Cogent Communications Group | Iridium Communications vs. IDT Corporation | Iridium Communications vs. Cable One |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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