Correlation Between Deere and WIMFARM SA

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

By analyzing existing cross correlation between Deere Company and WIMFARM SA EO, you can compare the effects of market volatilities on Deere and WIMFARM SA 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 WIMFARM SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Deere and WIMFARM SA.

Diversification Opportunities for Deere and WIMFARM SA

-0.01

Correlation Coefficient

Deere  WIMFARM SA

Good diversification

The 3 months correlation between Deere and WIMFARM is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Deere Company and WIMFARM SA EO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WIMFARM SA EO 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 WIMFARM SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WIMFARM SA EO has no effect on the direction of Deere i.e., Deere and WIMFARM SA go up and down completely randomly.

Pair Corralation between Deere and WIMFARM SA

Assuming the 90 days trading horizon Deere is expected to generate 1.98 times less return on investment than WIMFARM SA. But when comparing it to its historical volatility, Deere Company is 4.09 times less risky than WIMFARM SA. It trades about 0.07 of its potential returns per unit of risk. WIMFARM SA EO is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  321.00  in WIMFARM SA EO on December 1, 2024 and sell it today you would earn a total of  7.00  from holding WIMFARM SA EO or generate 2.18% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

Deere Company  vs.  WIMFARM SA EO

Deere Company

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Deere Company are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Deere is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

WIMFARM SA EO

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in WIMFARM SA EO are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, WIMFARM SA may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Deere and WIMFARM SA

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

The idea behind Deere Company and WIMFARM SA EO 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.