Correlation Between Deere and Textainer Group
Can any of the company-specific risk be diversified away by investing in both Deere and Textainer Group 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 Textainer Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Deere Company and Textainer Group Holdings, you can compare the effects of market volatilities on Deere and Textainer Group 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 Textainer Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Deere and Textainer Group.
Diversification Opportunities for Deere and Textainer Group
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Deere and Textainer is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Deere Company and Textainer Group Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Textainer Group Holdings 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 Textainer Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Textainer Group Holdings has no effect on the direction of Deere i.e., Deere and Textainer Group go up and down completely randomly.
Pair Corralation between Deere and Textainer Group
Allowing for the 90-day total investment horizon Deere Company is expected to generate 0.62 times more return on investment than Textainer Group. However, Deere Company is 1.62 times less risky than Textainer Group. It trades about 0.29 of its potential returns per unit of risk. Textainer Group Holdings is currently generating about -0.01 per unit of risk. If you would invest 40,469 in Deere Company on September 1, 2024 and sell it today you would earn a total of 6,121 from holding Deere Company or generate 15.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Deere Company vs. Textainer Group Holdings
Performance |
| Timeline |
| Deere Company |
| Textainer Group Holdings |
Deere and Textainer Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Deere and Textainer Group
The main advantage of trading using opposite Deere and Textainer Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Deere position performs unexpectedly, Textainer Group 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 Textainer Group will offset losses from the drop in Textainer Group's long position.The idea behind Deere Company and Textainer Group Holdings 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.| Textainer Group vs. Buhler Industries | Textainer Group vs. Austin Engineering Limited | Textainer Group vs. Ag Growth International | Textainer Group vs. Grow Solutions Holdings |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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