Correlation Between Deere and DevvStream Corp

Can any of the company-specific risk be diversified away by investing in both Deere and DevvStream Corp 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 Deere and DevvStream Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Deere Company and DevvStream Corp Common, you can compare the effects of market volatilities on Deere and DevvStream Corp 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 Deere with a short position of DevvStream Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Deere and DevvStream Corp.

Diversification Opportunities for Deere and DevvStream Corp

-0.51

Correlation Coefficient

Deere  DevvStream Corp

Excellent diversification

The 3 months correlation between Deere and DevvStream is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Deere Company and DevvStream Corp Common in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DevvStream Corp Common and Deere 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 Deere Company are associated (or correlated) with DevvStream Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DevvStream Corp Common has no effect on the direction of Deere i.e., Deere and DevvStream Corp go up and down completely randomly.

Pair Corralation between Deere and DevvStream Corp

Allowing for the 90-day total investment horizon Deere Company is expected to generate 0.08 times more return on investment than DevvStream Corp. However, Deere Company is 12.22 times less risky than DevvStream Corp. It trades about 0.05 of its potential returns per unit of risk. DevvStream Corp Common is currently generating about -0.05 per unit of risk. If you would invest  40,829  in Deere Company on September 19, 2024 and sell it today you would earn a total of  1,771  from holding Deere Company or generate 4.34% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Deere Company  vs.  DevvStream Corp Common

Deere Company

Risk-Adjusted Performance

3 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Deere Company are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Deere is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

DevvStream Corp Common

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DevvStream Corp Common has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Deere and DevvStream Corp

The main advantage of trading using opposite Deere and DevvStream Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Deere position performs unexpectedly, DevvStream Corp 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 DevvStream Corp will offset losses from the drop in DevvStream Corp's long position.

The idea behind Deere Company and DevvStream Corp Common 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.

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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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.