Correlation Between Deere and Icahn Enterprises
Can any of the company-specific risk be diversified away by investing in both Deere and Icahn Enterprises 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 Icahn Enterprises into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Deere Company and Icahn Enterprises LP, you can compare the effects of market volatilities on Deere and Icahn Enterprises 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 Icahn Enterprises. Check out your portfolio center. Please also check ongoing floating volatility patterns of Deere and Icahn Enterprises.
Diversification Opportunities for Deere and Icahn Enterprises
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Deere and Icahn is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Deere Company and Icahn Enterprises LP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Icahn Enterprises 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 Icahn Enterprises. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Icahn Enterprises has no effect on the direction of Deere i.e., Deere and Icahn Enterprises go up and down completely randomly.
Pair Corralation between Deere and Icahn Enterprises
Allowing for the 90-day total investment horizon Deere Company is expected to generate 0.8 times more return on investment than Icahn Enterprises. However, Deere Company is 1.25 times less risky than Icahn Enterprises. It trades about 0.17 of its potential returns per unit of risk. Icahn Enterprises LP is currently generating about -0.13 per unit of risk. If you would invest 39,889 in Deere Company on November 1, 2024 and sell it today you would earn a total of 8,093 from holding Deere Company or generate 20.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Deere Company vs. Icahn Enterprises LP
Performance |
| Timeline |
| Deere Company |
| Icahn Enterprises |
Deere and Icahn Enterprises Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Deere and Icahn Enterprises
The main advantage of trading using opposite Deere and Icahn Enterprises positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Deere position performs unexpectedly, Icahn Enterprises 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 Icahn Enterprises will offset losses from the drop in Icahn Enterprises' long position.The idea behind Deere Company and Icahn Enterprises LP 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.| Icahn Enterprises vs. Delek Energy | Icahn Enterprises vs. PBF Energy | Icahn Enterprises vs. HF Sinclair Corp | Icahn Enterprises vs. Delek Logistics Partners |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
Other Complementary Tools
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins |