Correlation Between Posera and Deere
Can any of the company-specific risk be diversified away by investing in both Posera 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 Posera and Deere into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Posera and Deere Company, you can compare the effects of market volatilities on Posera 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 Posera with a short position of Deere. Check out your portfolio center. Please also check ongoing floating volatility patterns of Posera and Deere.
Diversification Opportunities for Posera and Deere
Excellent diversification
The 3 months correlation between Posera and Deere is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Posera and Deere Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deere Company and Posera 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 Posera 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 Posera i.e., Posera and Deere go up and down completely randomly.
Pair Corralation between Posera and Deere
Assuming the 90 days horizon Posera is expected to generate 6.11 times more return on investment than Deere. However, Posera is 6.11 times more volatile than Deere Company. It trades about 0.01 of its potential returns per unit of risk. Deere Company is currently generating about 0.04 per unit of risk. If you would invest 8.26 in Posera on September 12, 2024 and sell it today you would lose (5.21) from holding Posera or give up 63.08% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Posera vs. Deere Company
Performance |
| Timeline |
| Posera |
| Deere Company |
Posera and Deere Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Posera and Deere
The main advantage of trading using opposite Posera and Deere positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Posera 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.The idea behind Posera and Deere Company pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Deere vs. Victory Integrity Smallmid Cap | Deere vs. Hilton Worldwide Holdings | Deere vs. NVIDIA | Deere vs. JPMorgan Chase Co |
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.
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