Correlation Between GILEAD and Caterpillar
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By analyzing existing cross correlation between GILEAD SCIENCES INC and Caterpillar, you can compare the effects of market volatilities on GILEAD 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 GILEAD with a short position of Caterpillar. Check out your portfolio center. Please also check ongoing floating volatility patterns of GILEAD and Caterpillar.
Diversification Opportunities for GILEAD and Caterpillar
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between GILEAD and Caterpillar is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding GILEAD SCIENCES INC and Caterpillar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caterpillar and GILEAD 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 GILEAD SCIENCES 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 GILEAD i.e., GILEAD and Caterpillar go up and down completely randomly.
Pair Corralation between GILEAD and Caterpillar
Assuming the 90 days trading horizon GILEAD SCIENCES INC is expected to under-perform the Caterpillar. But the bond apears to be less risky and, when comparing its historical volatility, GILEAD SCIENCES INC is 1.3 times less risky than Caterpillar. The bond trades about -0.01 of its potential returns per unit of risk. The Caterpillar is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 28,764 in Caterpillar on September 3, 2024 and sell it today you would earn a total of 11,847 from holding Caterpillar or generate 41.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 85.96% |
| Values | Daily Returns |
GILEAD SCIENCES INC vs. Caterpillar
Performance |
| Timeline |
| GILEAD SCIENCES INC |
| Caterpillar |
GILEAD and Caterpillar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GILEAD and Caterpillar
The main advantage of trading using opposite GILEAD and Caterpillar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GILEAD 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.| GILEAD vs. Sun Life Financial | GILEAD vs. Chiba Bank Ltd | GILEAD vs. Mill City Ventures | GILEAD vs. Comstock Holding Companies |
| Caterpillar vs. Partner Communications | Caterpillar vs. Merck Company | Caterpillar vs. Western Midstream Partners | Caterpillar vs. Edgewise Therapeutics |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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