Correlation Between ENTERPRISE and Caterpillar
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By analyzing existing cross correlation between ENTERPRISE PRODUCTS OPERATING and Caterpillar, you can compare the effects of market volatilities on ENTERPRISE 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 ENTERPRISE with a short position of Caterpillar. Check out your portfolio center. Please also check ongoing floating volatility patterns of ENTERPRISE and Caterpillar.
Diversification Opportunities for ENTERPRISE and Caterpillar
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between ENTERPRISE and Caterpillar is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding ENTERPRISE PRODUCTS OPERATING and Caterpillar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caterpillar and ENTERPRISE 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 ENTERPRISE PRODUCTS OPERATING 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 ENTERPRISE i.e., ENTERPRISE and Caterpillar go up and down completely randomly.
Pair Corralation between ENTERPRISE and Caterpillar
Assuming the 90 days trading horizon ENTERPRISE PRODUCTS OPERATING is expected to under-perform the Caterpillar. But the bond apears to be less risky and, when comparing its historical volatility, ENTERPRISE PRODUCTS OPERATING is 1.52 times less risky than Caterpillar. The bond trades about -0.19 of its potential returns per unit of risk. The Caterpillar is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 37,620 in Caterpillar on September 1, 2024 and sell it today you would earn a total of 2,991 from holding Caterpillar or generate 7.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ENTERPRISE PRODUCTS OPERATING vs. Caterpillar
Performance |
| Timeline |
| ENTERPRISE PRODUCTS |
| Caterpillar |
ENTERPRISE and Caterpillar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ENTERPRISE and Caterpillar
The main advantage of trading using opposite ENTERPRISE and Caterpillar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ENTERPRISE 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.| ENTERPRISE vs. AEP TEX INC | ENTERPRISE vs. US BANK NATIONAL | ENTERPRISE vs. Bank of America | ENTERPRISE vs. GE Aerospace |
| Caterpillar vs. AGCO Corporation | Caterpillar vs. Nikola Corp | Caterpillar vs. PACCAR Inc | Caterpillar vs. Deere Company |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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