Correlation Between Marijuana and Deere
Can any of the company-specific risk be diversified away by investing in both Marijuana 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 Marijuana and Deere into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Marijuana and Deere Company, you can compare the effects of market volatilities on Marijuana 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 Marijuana with a short position of Deere. Check out your portfolio center. Please also check ongoing floating volatility patterns of Marijuana and Deere.
Diversification Opportunities for Marijuana and Deere
Excellent diversification
The 3 months correlation between Marijuana and Deere is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Marijuana and Deere Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deere Company and Marijuana 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 Marijuana 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 Marijuana i.e., Marijuana and Deere go up and down completely randomly.
Pair Corralation between Marijuana and Deere
Given the investment horizon of 90 days Marijuana is expected to under-perform the Deere. In addition to that, Marijuana is 10.38 times more volatile than Deere Company. It trades about -0.22 of its total potential returns per unit of risk. Deere Company is currently generating about 0.3 per unit of volatility. If you would invest 39,375 in Deere Company on September 13, 2024 and sell it today you would earn a total of 5,428 from holding Deere Company or generate 13.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Marijuana vs. Deere Company
Performance |
| Timeline |
| Marijuana |
| Deere Company |
Marijuana and Deere Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Marijuana and Deere
The main advantage of trading using opposite Marijuana and Deere positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Marijuana 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.| Marijuana vs. Priority Aviation | Marijuana vs. Cbd Life Sciences | Marijuana vs. Hemp Inc | Marijuana vs. Emergent Health Corp |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
Other Complementary Tools
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets |