Correlation Between Deere and Austin Engineering
Can any of the company-specific risk be diversified away by investing in both Deere and Austin Engineering 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 Austin Engineering into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Deere Company and Austin Engineering Limited, you can compare the effects of market volatilities on Deere and Austin Engineering 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 Austin Engineering. Check out your portfolio center. Please also check ongoing floating volatility patterns of Deere and Austin Engineering.
Diversification Opportunities for Deere and Austin Engineering
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Deere and Austin is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Deere Company and Austin Engineering Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Austin Engineering 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 Austin Engineering. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Austin Engineering has no effect on the direction of Deere i.e., Deere and Austin Engineering go up and down completely randomly.
Pair Corralation between Deere and Austin Engineering
Allowing for the 90-day total investment horizon Deere is expected to generate 5.9 times less return on investment than Austin Engineering. But when comparing it to its historical volatility, Deere Company is 3.1 times less risky than Austin Engineering. It trades about 0.02 of its potential returns per unit of risk. Austin Engineering Limited is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 22.00 in Austin Engineering Limited on September 3, 2024 and sell it today you would earn a total of 8.00 from holding Austin Engineering Limited or generate 36.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Deere Company vs. Austin Engineering Limited
Performance |
| Timeline |
| Deere Company |
| Austin Engineering |
Deere and Austin Engineering Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Deere and Austin Engineering
The main advantage of trading using opposite Deere and Austin Engineering positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Deere position performs unexpectedly, Austin Engineering 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 Austin Engineering will offset losses from the drop in Austin Engineering's long position.| Deere vs. Partner Communications | Deere vs. Merck Company | Deere vs. Western Midstream Partners | Deere vs. Edgewise Therapeutics |
| Austin Engineering vs. Volvo AB ADR | Austin Engineering vs. Deere Company | Austin Engineering vs. Volvo AB ser | Austin Engineering vs. Deutsche Post AG |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
Other Complementary Tools
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance |