Correlation Between AmeraMex International and Deere
Can any of the company-specific risk be diversified away by investing in both AmeraMex International 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 AmeraMex International and Deere into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AmeraMex International and Deere Company, you can compare the effects of market volatilities on AmeraMex International 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 AmeraMex International with a short position of Deere. Check out your portfolio center. Please also check ongoing floating volatility patterns of AmeraMex International and Deere.
Diversification Opportunities for AmeraMex International and Deere
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between AmeraMex and Deere is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding AmeraMex International and Deere Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deere Company and AmeraMex International 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 AmeraMex International 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 AmeraMex International i.e., AmeraMex International and Deere go up and down completely randomly.
Pair Corralation between AmeraMex International and Deere
Given the investment horizon of 90 days AmeraMex International is expected to generate 9.49 times more return on investment than Deere. However, AmeraMex International is 9.49 times more volatile than Deere Company. It trades about 0.09 of its potential returns per unit of risk. Deere Company is currently generating about 0.13 per unit of risk. If you would invest 11.00 in AmeraMex International on September 1, 2024 and sell it today you would earn a total of 11.00 from holding AmeraMex International or generate 100.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
AmeraMex International vs. Deere Company
Performance |
| Timeline |
| AmeraMex International |
| Deere Company |
AmeraMex International and Deere Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AmeraMex International and Deere
The main advantage of trading using opposite AmeraMex International and Deere positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AmeraMex International 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.| AmeraMex International vs. American Premium Water | AmeraMex International vs. Arts Way Manufacturing Co | AmeraMex International vs. Astec Industries | AmeraMex International vs. Alamo Group |
Check out your portfolio center.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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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