Correlation Between Deere and HYATT HOTELS-A

Can any of the company-specific risk be diversified away by investing in both Deere and HYATT HOTELS-A 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 Deere and HYATT HOTELS-A into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Deere Company and HYATT HOTELS A, you can compare the effects of market volatilities on Deere and HYATT HOTELS-A 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 Deere with a short position of HYATT HOTELS-A. Check out your portfolio center. Please also check ongoing floating volatility patterns of Deere and HYATT HOTELS-A.

Diversification Opportunities for Deere and HYATT HOTELS-A

-0.02

Correlation Coefficient

Deere  HYATT HOTELS-A

Good diversification

The 3 months correlation between Deere and HYATT is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Deere Company and HYATT HOTELS A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HYATT HOTELS A and Deere 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 Deere Company are associated (or correlated) with HYATT HOTELS-A. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HYATT HOTELS A has no effect on the direction of Deere i.e., Deere and HYATT HOTELS-A go up and down completely randomly.

Pair Corralation between Deere and HYATT HOTELS-A

Assuming the 90 days trading horizon Deere Company is expected to generate 0.8 times more return on investment than HYATT HOTELS-A. However, Deere Company is 1.25 times less risky than HYATT HOTELS-A. It trades about 0.06 of its potential returns per unit of risk. HYATT HOTELS A is currently generating about -0.19 per unit of risk. If you would invest  40,689  in Deere Company on December 30, 2024 and sell it today you would earn a total of  2,351  from holding Deere Company or generate 5.78% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Deere Company  vs.  HYATT HOTELS A

Deere Company

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Deere Company are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Deere may actually be approaching a critical reversion point that can send shares even higher in April 2025.

HYATT HOTELS A

Risk-Adjusted Performance

Very Weak

Over the last 90 days HYATT HOTELS A has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Deere and HYATT HOTELS-A

The main advantage of trading using opposite Deere and HYATT HOTELS-A positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Deere position performs unexpectedly, HYATT HOTELS-A 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 HYATT HOTELS-A will offset losses from the drop in HYATT HOTELS-A's long position.

The idea behind Deere Company and HYATT HOTELS A 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.

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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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.