Correlation Between Hyatt Hotels and Caterpillar
Can any of the company-specific risk be diversified away by investing in both Hyatt Hotels and Caterpillar at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Hyatt Hotels and Caterpillar into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hyatt Hotels and Caterpillar, you can compare the effects of market volatilities on Hyatt Hotels 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 Hyatt Hotels with a short position of Caterpillar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyatt Hotels and Caterpillar.
Diversification Opportunities for Hyatt Hotels and Caterpillar
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Hyatt and Caterpillar is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Hyatt Hotels and Caterpillar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caterpillar and Hyatt Hotels 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 Hyatt Hotels 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 Hyatt Hotels i.e., Hyatt Hotels and Caterpillar go up and down completely randomly.
Pair Corralation between Hyatt Hotels and Caterpillar
Taking into account the 90-day investment horizon Hyatt Hotels is expected to generate 2.97 times less return on investment than Caterpillar. But when comparing it to its historical volatility, Hyatt Hotels is 1.16 times less risky than Caterpillar. It trades about 0.1 of its potential returns per unit of risk. Caterpillar is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 40,662 in Caterpillar on August 15, 2025 and sell it today you would earn a total of 16,131 from holding Caterpillar or generate 39.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hyatt Hotels vs. Caterpillar
Performance |
| Timeline |
| Hyatt Hotels |
| Caterpillar |
Hyatt Hotels and Caterpillar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hyatt Hotels and Caterpillar
The main advantage of trading using opposite Hyatt Hotels and Caterpillar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hyatt Hotels 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.| Hyatt Hotels vs. Huazhu Group | Hyatt Hotels vs. Wynn Resorts Limited | Hyatt Hotels vs. Ball Corporation | Hyatt Hotels vs. Dominos Pizza Common |
| Caterpillar vs. Raytheon Technologies Corp | Caterpillar vs. Deere Company | Caterpillar vs. GE Aerospace | Caterpillar vs. Eaton PLC |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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