Correlation Between Deere and Agrify Corp
Can any of the company-specific risk be diversified away by investing in both Deere and Agrify Corp 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 Agrify Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Deere Company and Agrify Corp, you can compare the effects of market volatilities on Deere and Agrify Corp 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 Agrify Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Deere and Agrify Corp.
Diversification Opportunities for Deere and Agrify Corp
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Deere and Agrify is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Deere Company and Agrify Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Agrify Corp 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 Agrify Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Agrify Corp has no effect on the direction of Deere i.e., Deere and Agrify Corp go up and down completely randomly.
Pair Corralation between Deere and Agrify Corp
Allowing for the 90-day total investment horizon Deere Company is expected to generate 0.23 times more return on investment than Agrify Corp. However, Deere Company is 4.43 times less risky than Agrify Corp. It trades about 0.34 of its potential returns per unit of risk. Agrify Corp is currently generating about -0.09 per unit of risk. If you would invest 41,000 in Deere Company on November 9, 2024 and sell it today you would earn a total of 5,498 from holding Deere Company or generate 13.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Deere Company vs. Agrify Corp
Performance |
| Timeline |
| Deere Company |
| Agrify Corp |
Deere and Agrify Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Deere and Agrify Corp
The main advantage of trading using opposite Deere and Agrify Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Deere position performs unexpectedly, Agrify Corp 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 Agrify Corp will offset losses from the drop in Agrify Corp's long position.The idea behind Deere Company and Agrify Corp 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.| Agrify Corp vs. MYR Group | Agrify Corp vs. Granite Construction Incorporated | Agrify Corp vs. Construction Partners | Agrify Corp vs. Great Lakes Dredge |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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