Correlation Between North Peak and Deere
Can any of the company-specific risk be diversified away by investing in both North Peak 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 North Peak and Deere into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between North Peak Resources and Deere Company, you can compare the effects of market volatilities on North Peak 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 North Peak with a short position of Deere. Check out your portfolio center. Please also check ongoing floating volatility patterns of North Peak and Deere.
Diversification Opportunities for North Peak and Deere
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between North and Deere is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding North Peak Resources and Deere Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deere Company and North Peak 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 North Peak Resources 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 North Peak i.e., North Peak and Deere go up and down completely randomly.
Pair Corralation between North Peak and Deere
Assuming the 90 days horizon North Peak Resources is expected to under-perform the Deere. In addition to that, North Peak is 1.59 times more volatile than Deere Company. It trades about -0.32 of its total potential returns per unit of risk. Deere Company is currently generating about 0.19 per unit of volatility. If you would invest 40,453 in Deere Company on September 18, 2024 and sell it today you would earn a total of 3,452 from holding Deere Company or generate 8.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
North Peak Resources vs. Deere Company
Performance |
| Timeline |
| North Peak Resources |
| Deere Company |
North Peak and Deere Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with North Peak and Deere
The main advantage of trading using opposite North Peak and Deere positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if North Peak 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.| North Peak vs. Deere Company | North Peak vs. Caterpillar | North Peak vs. Lion Electric Corp | North Peak vs. Nikola Corp |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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