Correlation Between Caterpillar and TARGET
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By analyzing existing cross correlation between Caterpillar and TARGET PORATION, you can compare the effects of market volatilities on Caterpillar and TARGET 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 TARGET. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caterpillar and TARGET.
Diversification Opportunities for Caterpillar and TARGET
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Caterpillar and TARGET is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Caterpillar and TARGET PORATION in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TARGET PORATION 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 TARGET. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TARGET PORATION has no effect on the direction of Caterpillar i.e., Caterpillar and TARGET go up and down completely randomly.
Pair Corralation between Caterpillar and TARGET
Considering the 90-day investment horizon Caterpillar is expected to generate 2.8 times more return on investment than TARGET. However, Caterpillar is 2.8 times more volatile than TARGET PORATION. It trades about 0.16 of its potential returns per unit of risk. TARGET PORATION is currently generating about -0.15 per unit of risk. If you would invest 33,902 in Caterpillar on September 3, 2024 and sell it today you would earn a total of 6,709 from holding Caterpillar or generate 19.79% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 96.88% |
Values | Daily Returns |
Caterpillar vs. TARGET PORATION
Performance |
Timeline |
Caterpillar |
TARGET PORATION |
Caterpillar and TARGET Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Caterpillar and TARGET
The main advantage of trading using opposite Caterpillar and TARGET positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caterpillar position performs unexpectedly, TARGET 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 TARGET will offset losses from the drop in TARGET's long position.Caterpillar vs. Partner Communications | Caterpillar vs. Merck Company | Caterpillar vs. Western Midstream Partners | Caterpillar vs. Edgewise Therapeutics |
TARGET vs. NL Industries | TARGET vs. The Joint Corp | TARGET vs. Luxfer Holdings PLC | TARGET vs. Merit Medical Systems |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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