Correlation Between Hyster Yale and Deere

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

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

Diversification Opportunities for Hyster Yale and Deere

-0.06

Correlation Coefficient

Hyster Yale  Deere

Good diversification

The 3 months correlation between Hyster and Deere is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Hyster Yale Materials Handling and Deere Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deere Company and Hyster Yale 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 Hyster Yale Materials Handling are associated (or correlated) with Deere. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deere Company has no effect on the direction of Hyster Yale i.e., Hyster Yale and Deere go up and down completely randomly.

Pair Corralation between Hyster Yale and Deere

Allowing for the 90-day total investment horizon Hyster Yale Materials Handling is expected to under-perform the Deere. In addition to that, Hyster Yale is 1.7 times more volatile than Deere Company. It trades about -0.01 of its total potential returns per unit of risk. Deere Company is currently generating about 0.16 per unit of volatility. If you would invest  39,057  in Deere Company on September 4, 2024 and sell it today you would earn a total of  6,868  from holding Deere Company or generate 17.58% return on investment over 90 days.

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

Hyster Yale Materials Handling  vs.  Deere Company

Hyster Yale Materials

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hyster Yale Materials Handling has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Hyster Yale is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Deere Company

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Deere Company are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating technical and fundamental indicators, Deere exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hyster Yale and Deere

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

The idea behind Hyster Yale Materials Handling and Deere Company 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..