Correlation Between Risk George and Deere

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

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

Diversification Opportunities for Risk George and Deere

0.61

Correlation Coefficient

Risk George  Deere

Poor diversification

The 3 months correlation between Risk and Deere is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Risk George Inds and Deere Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deere Company and Risk George 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 Risk George Inds 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 Risk George i.e., Risk George and Deere go up and down completely randomly.

Pair Corralation between Risk George and Deere

Assuming the 90 days horizon Risk George Inds is expected to generate 3.48 times more return on investment than Deere. However, Risk George is 3.48 times more volatile than Deere Company. It trades about 0.05 of its potential returns per unit of risk. Deere Company is currently generating about 0.01 per unit of risk. If you would invest  972.00  in Risk George Inds on September 14, 2024 and sell it today you would earn a total of  688.00  from holding Risk George Inds or generate 70.78% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.56%
Values	Daily Returns

Risk George Inds  vs.  Deere Company

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 unsteady forward indicators, Risk George sustained solid returns over the last few months and may actually be approaching a breakup point.

Deere Company

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Deere Company are ranked lower than 9 (%) 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.

Pair Trading with Risk George and Deere

The main advantage of trading using opposite Risk George and Deere positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Risk George 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 Risk George Inds 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.