Correlation Between Deere and Risk George

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

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

Diversification Opportunities for Deere and Risk George

0.57

Correlation Coefficient

Deere  Risk George

Very weak diversification

The 3 months correlation between Deere and Risk is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Deere Company and Risk George Inds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Risk George Inds 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 Risk George. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Risk George Inds has no effect on the direction of Deere i.e., Deere and Risk George go up and down completely randomly.

Pair Corralation between Deere and Risk George

Allowing for the 90-day total investment horizon Deere is expected to generate 1.7 times less return on investment than Risk George. But when comparing it to its historical volatility, Deere Company is 1.27 times less risky than Risk George. It trades about 0.11 of its potential returns per unit of risk. Risk George Inds is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  1,369  in Risk George Inds on September 15, 2024 and sell it today you would earn a total of  291.00  from holding Risk George Inds or generate 21.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.46%
Values	Daily Returns

Deere Company  vs.  Risk George Inds

Deere Company

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Deere Company are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating technical and fundamental indicators, Deere may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Risk George Inds

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Risk George Inds are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak forward indicators, Risk George sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Deere and Risk George

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

The idea behind Deere Company and Risk George Inds 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.