Correlation Between Deere and Deutsche Post

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

By analyzing existing cross correlation between Deere Company and Deutsche Post AG, you can compare the effects of market volatilities on Deere and Deutsche Post 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 Deutsche Post. Check out your portfolio center. Please also check ongoing floating volatility patterns of Deere and Deutsche Post.

Diversification Opportunities for Deere and Deutsche Post

-0.53

Correlation Coefficient

Deere  Deutsche Post

Excellent diversification

The 3 months correlation between Deere and Deutsche is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Deere Company and Deutsche Post AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deutsche Post AG 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 Deutsche Post. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deutsche Post AG has no effect on the direction of Deere i.e., Deere and Deutsche Post go up and down completely randomly.

Pair Corralation between Deere and Deutsche Post

Allowing for the 90-day total investment horizon Deere Company is expected to generate 0.79 times more return on investment than Deutsche Post. However, Deere Company is 1.26 times less risky than Deutsche Post. It trades about 0.19 of its potential returns per unit of risk. Deutsche Post AG is currently generating about -0.13 per unit of risk. If you would invest  38,234  in Deere Company on September 5, 2024 and sell it today you would earn a total of  7,691  from holding Deere Company or generate 20.12% 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.  Deutsche Post AG

Deere Company

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Deere Company are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile technical and fundamental indicators, Deere exhibited solid returns over the last few months and may actually be approaching a breakup point.

Deutsche Post AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Deutsche Post AG has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Deere and Deutsche Post

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

The idea behind Deere Company and Deutsche Post AG 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.