Correlation Between Deere and CNHI Old

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

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

Diversification Opportunities for Deere and CNHI Old

0.0

Correlation Coefficient

Deere  CNHI Old

Pay attention - limited upside

The 3 months correlation between Deere and CNHI is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Deere Company and CNHI Old in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CNHI Old 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 CNHI Old. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CNHI Old has no effect on the direction of Deere i.e., Deere and CNHI Old go up and down completely randomly.

Pair Corralation between Deere and CNHI Old

If you would invest  44,190  in Deere Company on December 17, 2024 and sell it today you would earn a total of  3,560  from holding Deere Company or generate 8.06% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Deere Company  vs.  CNHI Old

Deere Company

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Deere Company are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating technical and fundamental indicators, Deere may actually be approaching a critical reversion point that can send shares even higher in April 2025.

CNHI Old

Risk-Adjusted Performance

Very Weak

Over the last 90 days CNHI Old has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical indicators, CNHI Old is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Deere and CNHI Old

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

The idea behind Deere Company and CNHI Old 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.