Correlation Between Deere and GreenPower
Can any of the company-specific risk be diversified away by investing in both Deere and GreenPower 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 GreenPower into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Deere Company and GreenPower Motor, you can compare the effects of market volatilities on Deere and GreenPower 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 GreenPower. Check out your portfolio center. Please also check ongoing floating volatility patterns of Deere and GreenPower.
Diversification Opportunities for Deere and GreenPower
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Deere and GreenPower is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Deere Company and GreenPower Motor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GreenPower Motor 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 GreenPower. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GreenPower Motor has no effect on the direction of Deere i.e., Deere and GreenPower go up and down completely randomly.
Pair Corralation between Deere and GreenPower
Allowing for the 90-day total investment horizon Deere Company is expected to generate 0.31 times more return on investment than GreenPower. However, Deere Company is 3.18 times less risky than GreenPower. It trades about 0.16 of its potential returns per unit of risk. GreenPower Motor is currently generating about -0.13 per unit of risk. If you would invest 40,604 in Deere Company on September 5, 2024 and sell it today you would earn a total of 5,022 from holding Deere Company or generate 12.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Deere Company vs. GreenPower Motor
Performance |
| Timeline |
| Deere Company |
| GreenPower Motor |
Deere and GreenPower Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Deere and GreenPower
The main advantage of trading using opposite Deere and GreenPower positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Deere position performs unexpectedly, GreenPower 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 GreenPower will offset losses from the drop in GreenPower's long position.| Deere vs. MYR Group | Deere vs. Granite Construction Incorporated | Deere vs. Construction Partners | Deere vs. Great Lakes Dredge |
| GreenPower vs. AGCO Corporation | GreenPower vs. Deere Company | GreenPower vs. Lindsay | GreenPower vs. Lion Electric 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
Other Complementary Tools
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules |