Correlation Between FORWARD AIR and Deere
Can any of the company-specific risk be diversified away by investing in both FORWARD AIR and Deere 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 FORWARD AIR and Deere into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FORWARD AIR P and Deere Company, you can compare the effects of market volatilities on FORWARD AIR and Deere 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 FORWARD AIR with a short position of Deere. Check out your portfolio center. Please also check ongoing floating volatility patterns of FORWARD AIR and Deere.
Diversification Opportunities for FORWARD AIR and Deere
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between FORWARD and Deere is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding FORWARD AIR P and Deere Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deere Company and FORWARD AIR 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 FORWARD AIR P are associated (or correlated) with Deere. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deere Company has no effect on the direction of FORWARD AIR i.e., FORWARD AIR and Deere go up and down completely randomly.
Pair Corralation between FORWARD AIR and Deere
Assuming the 90 days horizon FORWARD AIR is expected to generate 2.17 times less return on investment than Deere. In addition to that, FORWARD AIR is 2.79 times more volatile than Deere Company. It trades about 0.06 of its total potential returns per unit of risk. Deere Company is currently generating about 0.35 per unit of volatility. If you would invest 37,300 in Deere Company on September 2, 2024 and sell it today you would earn a total of 7,085 from holding Deere Company or generate 18.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
FORWARD AIR P vs. Deere Company
Performance |
| Timeline |
| FORWARD AIR P |
| Deere Company |
FORWARD AIR and Deere Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FORWARD AIR and Deere
The main advantage of trading using opposite FORWARD AIR and Deere positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FORWARD AIR position performs unexpectedly, Deere 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 Deere will offset losses from the drop in Deere's long position.| FORWARD AIR vs. Apple Inc | FORWARD AIR vs. Apple Inc | FORWARD AIR vs. Apple Inc | FORWARD AIR vs. Apple 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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