Correlation Between Deere and Palfinger
Can any of the company-specific risk be diversified away by investing in both Deere and Palfinger 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 Palfinger into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Deere Company and Palfinger AG, you can compare the effects of market volatilities on Deere and Palfinger 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 Palfinger. Check out your portfolio center. Please also check ongoing floating volatility patterns of Deere and Palfinger.
Diversification Opportunities for Deere and Palfinger
Good diversification
The 3 months correlation between Deere and Palfinger is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Deere Company and Palfinger AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Palfinger AG 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 Palfinger. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Palfinger AG has no effect on the direction of Deere i.e., Deere and Palfinger go up and down completely randomly.
Pair Corralation between Deere and Palfinger
Allowing for the 90-day total investment horizon Deere Company is expected to generate 1.08 times more return on investment than Palfinger. However, Deere is 1.08 times more volatile than Palfinger AG. It trades about 0.02 of its potential returns per unit of risk. Palfinger AG is currently generating about 0.01 per unit of risk. If you would invest 41,821 in Deere Company on September 5, 2024 and sell it today you would earn a total of 4,104 from holding Deere Company or generate 9.81% 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. Palfinger AG
Performance |
| Timeline |
| Deere Company |
| Palfinger AG |
Deere and Palfinger Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Deere and Palfinger
The main advantage of trading using opposite Deere and Palfinger positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Deere position performs unexpectedly, Palfinger 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 Palfinger will offset losses from the drop in Palfinger's long position.| Deere vs. MYR Group | Deere vs. Granite Construction Incorporated | Deere vs. Construction Partners | Deere vs. Great Lakes Dredge |
| Palfinger vs. NL Industries | Palfinger vs. Avient Corp | Palfinger vs. Luxfer Holdings PLC | Palfinger vs. Ecolab Inc |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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