Correlation Between LG Electronics and Deere
Can any of the company-specific risk be diversified away by investing in both LG Electronics 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 LG Electronics and Deere into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LG Electronics and Deere Company, you can compare the effects of market volatilities on LG Electronics 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 LG Electronics with a short position of Deere. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Electronics and Deere.
Diversification Opportunities for LG Electronics and Deere
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between LGLG and Deere is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding LG Electronics and Deere Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deere Company and LG Electronics 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 LG Electronics 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 LG Electronics i.e., LG Electronics and Deere go up and down completely randomly.
Pair Corralation between LG Electronics and Deere
Assuming the 90 days trading horizon LG Electronics is expected to under-perform the Deere. But the stock apears to be less risky and, when comparing its historical volatility, LG Electronics is 1.5 times less risky than Deere. The stock trades about -0.07 of its potential returns per unit of risk. The Deere Company is currently generating about 0.35 of returns per unit of risk over similar time horizon. 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 Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
LG Electronics vs. Deere Company
Performance |
| Timeline |
| LG Electronics |
| Deere Company |
LG Electronics and Deere Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LG Electronics and Deere
The main advantage of trading using opposite LG Electronics and Deere positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Electronics 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.| LG Electronics vs. H FARM SPA | LG Electronics vs. Merit Medical Systems | LG Electronics vs. CompuGroup Medical SE | LG Electronics vs. NorAm Drilling AS |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
Other Complementary Tools
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Fundamental Analysis View fundamental data based on most recent published financial statements |