Correlation Between Caterpillar and FEDEX
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By analyzing existing cross correlation between Caterpillar and FEDEX P 495, you can compare the effects of market volatilities on Caterpillar and FEDEX 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 FEDEX. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caterpillar and FEDEX.
Diversification Opportunities for Caterpillar and FEDEX
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Caterpillar and FEDEX is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Caterpillar and FEDEX P 495 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FEDEX P 495 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 are associated (or correlated) with FEDEX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FEDEX P 495 has no effect on the direction of Caterpillar i.e., Caterpillar and FEDEX go up and down completely randomly.
Pair Corralation between Caterpillar and FEDEX
Considering the 90-day investment horizon Caterpillar is expected to generate 1.67 times more return on investment than FEDEX. However, Caterpillar is 1.67 times more volatile than FEDEX P 495. It trades about 0.12 of its potential returns per unit of risk. FEDEX P 495 is currently generating about -0.01 per unit of risk. If you would invest 33,836 in Caterpillar on September 12, 2024 and sell it today you would earn a total of 5,003 from holding Caterpillar or generate 14.79% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 96.83% |
Values | Daily Returns |
Caterpillar vs. FEDEX P 495
Performance |
Timeline |
Caterpillar |
FEDEX P 495 |
Caterpillar and FEDEX Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Caterpillar and FEDEX
The main advantage of trading using opposite Caterpillar and FEDEX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caterpillar position performs unexpectedly, FEDEX 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 FEDEX will offset losses from the drop in FEDEX's long position.Caterpillar vs. Victory Integrity Smallmid Cap | Caterpillar vs. Hilton Worldwide Holdings | Caterpillar vs. NVIDIA | Caterpillar vs. JPMorgan Chase Co |
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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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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