Correlation Between Caterpillar and Traton SE
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By analyzing existing cross correlation between Caterpillar and Traton SE, you can compare the effects of market volatilities on Caterpillar and Traton SE 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 Traton SE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caterpillar and Traton SE.
Diversification Opportunities for Caterpillar and Traton SE
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Caterpillar and Traton is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Caterpillar and Traton SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Traton SE 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 Traton SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Traton SE has no effect on the direction of Caterpillar i.e., Caterpillar and Traton SE go up and down completely randomly.
Pair Corralation between Caterpillar and Traton SE
Assuming the 90 days trading horizon Caterpillar is expected to under-perform the Traton SE. But the stock apears to be less risky and, when comparing its historical volatility, Caterpillar is 2.24 times less risky than Traton SE. The stock trades about -0.35 of its potential returns per unit of risk. The Traton SE is currently generating about -0.11 of returns per unit of risk over similar time horizon. If you would invest 2,880 in Traton SE on September 23, 2024 and sell it today you would lose (175.00) from holding Traton SE or give up 6.08% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Flat |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Caterpillar vs. Traton SE
Performance |
Timeline |
Caterpillar |
Traton SE |
Caterpillar and Traton SE Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Caterpillar and Traton SE
The main advantage of trading using opposite Caterpillar and Traton SE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caterpillar position performs unexpectedly, Traton SE 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 Traton SE will offset losses from the drop in Traton SE's long position.Caterpillar vs. Caterpillar | Caterpillar vs. Deere Company | Caterpillar vs. AB Volvo | Caterpillar vs. VOLVO B UNSPADR |
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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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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