Correlation Between Terex and AGCO
Can any of the company-specific risk be diversified away by investing in both Terex and AGCO 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 Terex and AGCO into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Terex and AGCO Corporation, you can compare the effects of market volatilities on Terex and AGCO 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 Terex with a short position of AGCO. Check out your portfolio center. Please also check ongoing floating volatility patterns of Terex and AGCO.
Diversification Opportunities for Terex and AGCO
Very weak diversification
The 3 months correlation between Terex and AGCO is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Terex and AGCO Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AGCO and Terex 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 Terex are associated (or correlated) with AGCO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AGCO has no effect on the direction of Terex i.e., Terex and AGCO go up and down completely randomly.
Pair Corralation between Terex and AGCO
Assuming the 90 days horizon Terex is expected to generate 0.76 times more return on investment than AGCO. However, Terex is 1.31 times less risky than AGCO. It trades about 0.21 of its potential returns per unit of risk. AGCO Corporation is currently generating about 0.13 per unit of risk. If you would invest 4,657 in Terex on September 3, 2024 and sell it today you would earn a total of 487.00 from holding Terex or generate 10.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Terex vs. AGCO Corp.
Performance |
| Timeline |
| Terex |
| AGCO |
Terex and AGCO Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Terex and AGCO
The main advantage of trading using opposite Terex and AGCO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Terex position performs unexpectedly, AGCO 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 AGCO will offset losses from the drop in AGCO's long position.| Terex vs. Federal Agricultural Mortgage | Terex vs. Dairy Farm International | Terex vs. DAIRY FARM INTL | Terex vs. Regions Financial |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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