Correlation Between CATERPILLAR and 00108WAF7
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By analyzing existing cross correlation between CATERPILLAR FINANCIAL SERVICES and AEP TEX INC, you can compare the effects of market volatilities on CATERPILLAR and 00108WAF7 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 00108WAF7. Check out your portfolio center. Please also check ongoing floating volatility patterns of CATERPILLAR and 00108WAF7.
Diversification Opportunities for CATERPILLAR and 00108WAF7
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between CATERPILLAR and 00108WAF7 is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding CATERPILLAR FINANCIAL SERVICES and AEP TEX INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AEP TEX INC 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 00108WAF7. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AEP TEX INC has no effect on the direction of CATERPILLAR i.e., CATERPILLAR and 00108WAF7 go up and down completely randomly.
Pair Corralation between CATERPILLAR and 00108WAF7
Assuming the 90 days trading horizon CATERPILLAR FINANCIAL SERVICES is expected to under-perform the 00108WAF7. But the bond apears to be less risky and, when comparing its historical volatility, CATERPILLAR FINANCIAL SERVICES is 2.89 times less risky than 00108WAF7. The bond trades about -0.19 of its potential returns per unit of risk. The AEP TEX INC is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest 7,441 in AEP TEX INC on September 5, 2024 and sell it today you would earn a total of 780.00 from holding AEP TEX INC or generate 10.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 65.0% |
| Values | Daily Returns |
CATERPILLAR FINANCIAL SERVICES vs. AEP TEX INC
Performance |
| Timeline |
| CATERPILLAR FINANCIAL |
| AEP TEX INC |
CATERPILLAR and 00108WAF7 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CATERPILLAR and 00108WAF7
The main advantage of trading using opposite CATERPILLAR and 00108WAF7 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CATERPILLAR position performs unexpectedly, 00108WAF7 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 00108WAF7 will offset losses from the drop in 00108WAF7's long position.| CATERPILLAR vs. AEP TEX INC | CATERPILLAR vs. US BANK NATIONAL | CATERPILLAR vs. Jackson Financial | CATERPILLAR vs. MetLife |
| 00108WAF7 vs. Oatly Group AB | 00108WAF7 vs. Constellation Brands Class | 00108WAF7 vs. Iridium Communications | 00108WAF7 vs. Compania Cervecerias Unidas |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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