Correlation Between Deere and Mammoth Energy
Can any of the company-specific risk be diversified away by investing in both Deere and Mammoth Energy 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 Mammoth Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Deere Company and Mammoth Energy Services, you can compare the effects of market volatilities on Deere and Mammoth Energy 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 Mammoth Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Deere and Mammoth Energy.
Diversification Opportunities for Deere and Mammoth Energy
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Deere and Mammoth is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Deere Company and Mammoth Energy Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mammoth Energy Services 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 Mammoth Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mammoth Energy Services has no effect on the direction of Deere i.e., Deere and Mammoth Energy go up and down completely randomly.
Pair Corralation between Deere and Mammoth Energy
Allowing for the 90-day total investment horizon Deere Company is expected to generate 0.5 times more return on investment than Mammoth Energy. However, Deere Company is 2.01 times less risky than Mammoth Energy. It trades about 0.39 of its potential returns per unit of risk. Mammoth Energy Services is currently generating about 0.02 per unit of risk. If you would invest 41,818 in Deere Company on November 2, 2024 and sell it today you would earn a total of 5,975 from holding Deere Company or generate 14.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.0% |
| Values | Daily Returns |
Deere Company vs. Mammoth Energy Services
Performance |
| Timeline |
| Deere Company |
| Mammoth Energy Services |
Deere and Mammoth Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Deere and Mammoth Energy
The main advantage of trading using opposite Deere and Mammoth Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Deere position performs unexpectedly, Mammoth Energy 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 Mammoth Energy will offset losses from the drop in Mammoth Energy's long position.The idea behind Deere Company and Mammoth Energy Services 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.| Mammoth Energy vs. Matthews International | Mammoth Energy vs. Griffon | Mammoth Energy vs. Steel Partners Holdings | Mammoth Energy vs. Compass Diversified 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
Other Complementary Tools
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators |