Correlation Between Xos and Deere
Can any of the company-specific risk be diversified away by investing in both Xos 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 Xos and Deere into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xos Inc and Deere Company, you can compare the effects of market volatilities on Xos 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 Xos with a short position of Deere. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xos and Deere.
Diversification Opportunities for Xos and Deere
Excellent diversification
The 3 months correlation between Xos and Deere is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Xos Inc and Deere Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deere Company and Xos 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 Xos Inc 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 Xos i.e., Xos and Deere go up and down completely randomly.
Pair Corralation between Xos and Deere
Considering the 90-day investment horizon Xos Inc is expected to under-perform the Deere. In addition to that, Xos is 4.05 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 0.01 per unit of volatility. If you would invest 42,644 in Deere Company on August 27, 2024 and sell it today you would earn a total of 2,021 from holding Deere Company or generate 4.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Xos Inc vs. Deere Company
Performance |
| Timeline |
| Xos Inc |
| Deere Company |
Xos and Deere Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xos and Deere
The main advantage of trading using opposite Xos and Deere positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xos 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 Xos Inc 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. MYR Group | Deere vs. Granite Construction Incorporated | Deere vs. Construction Partners | Deere vs. Great Lakes Dredge |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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