Correlation Between Metso Outotec and Deere
Can any of the company-specific risk be diversified away by investing in both Metso Outotec 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 Metso Outotec and Deere into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Metso Outotec Oyj and Deere Company, you can compare the effects of market volatilities on Metso Outotec 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 Metso Outotec with a short position of Deere. Check out your portfolio center. Please also check ongoing floating volatility patterns of Metso Outotec and Deere.
Diversification Opportunities for Metso Outotec and Deere
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Metso and Deere is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Metso Outotec Oyj and Deere Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deere Company and Metso Outotec 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 Metso Outotec Oyj 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 Metso Outotec i.e., Metso Outotec and Deere go up and down completely randomly.
Pair Corralation between Metso Outotec and Deere
Assuming the 90 days horizon Metso Outotec Oyj is expected to under-perform the Deere. In addition to that, Metso Outotec is 1.25 times more volatile than Deere Company. It trades about -0.01 of its total potential returns per unit of risk. Deere Company is currently generating about 0.02 per unit of volatility. If you would invest 39,254 in Deere Company on August 31, 2024 and sell it today you would earn a total of 4,886 from holding Deere Company or generate 12.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Metso Outotec Oyj vs. Deere Company
Performance |
| Timeline |
| Metso Outotec Oyj |
| Deere Company |
Metso Outotec and Deere Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Metso Outotec and Deere
The main advantage of trading using opposite Metso Outotec and Deere positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Metso Outotec 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.| Metso Outotec vs. Fair Isaac Corp | Metso Outotec vs. WIZZ AIR HLDGUNSPADR4 | Metso Outotec vs. AIR LIQUIDE ADR | Metso Outotec vs. Perdoceo Education |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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