Correlation Between MASTEC and Caterpillar
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By analyzing existing cross correlation between MASTEC INC 45 and Caterpillar, you can compare the effects of market volatilities on MASTEC 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 MASTEC with a short position of Caterpillar. Check out your portfolio center. Please also check ongoing floating volatility patterns of MASTEC and Caterpillar.
Diversification Opportunities for MASTEC and Caterpillar
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between MASTEC and Caterpillar is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding MASTEC INC 45 and Caterpillar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caterpillar and MASTEC 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 MASTEC INC 45 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 MASTEC i.e., MASTEC and Caterpillar go up and down completely randomly.
Pair Corralation between MASTEC and Caterpillar
Assuming the 90 days trading horizon MASTEC INC 45 is expected to under-perform the Caterpillar. But the bond apears to be less risky and, when comparing its historical volatility, MASTEC INC 45 is 2.07 times less risky than Caterpillar. The bond trades about -0.18 of its potential returns per unit of risk. The Caterpillar is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 37,963 in Caterpillar on September 2, 2024 and sell it today you would earn a total of 2,648 from holding Caterpillar or generate 6.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 90.48% |
| Values | Daily Returns |
MASTEC INC 45 vs. Caterpillar
Performance |
| Timeline |
| MASTEC INC 45 |
| Caterpillar |
MASTEC and Caterpillar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MASTEC and Caterpillar
The main advantage of trading using opposite MASTEC and Caterpillar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MASTEC 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.The idea behind MASTEC INC 45 and Caterpillar pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| 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 Global Correlations module to find global opportunities by holding instruments from different markets.
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