Correlation Between Hitachi Construction and Deere
Can any of the company-specific risk be diversified away by investing in both Hitachi Construction 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 Hitachi Construction and Deere into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hitachi Construction Machinery and Deere Company, you can compare the effects of market volatilities on Hitachi Construction 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 Hitachi Construction with a short position of Deere. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hitachi Construction and Deere.
Diversification Opportunities for Hitachi Construction and Deere
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Hitachi and Deere is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Hitachi Construction Machinery and Deere Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deere Company and Hitachi Construction 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 Hitachi Construction Machinery 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 Hitachi Construction i.e., Hitachi Construction and Deere go up and down completely randomly.
Pair Corralation between Hitachi Construction and Deere
Assuming the 90 days horizon Hitachi Construction Machinery is expected to under-perform the Deere. In addition to that, Hitachi Construction is 1.5 times more volatile than Deere Company. It trades about -0.02 of its total potential returns per unit of risk. Deere Company is currently generating about 0.06 per unit of volatility. If you would invest 35,473 in Deere Company on August 24, 2024 and sell it today you would earn a total of 8,281 from holding Deere Company or generate 23.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hitachi Construction Machinery vs. Deere Company
Performance |
| Timeline |
| Hitachi Construction |
| Deere Company |
Hitachi Construction and Deere Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hitachi Construction and Deere
The main advantage of trading using opposite Hitachi Construction and Deere positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hitachi Construction 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.| Hitachi Construction vs. Xos Inc | Hitachi Construction vs. Nikola Corp | Hitachi Construction vs. Hydrofarm Holdings Group | Hitachi Construction vs. Aquagold International |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
Other Complementary Tools
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| CEOs Directory Screen CEOs from public companies around the world | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance |