Correlation Between Deere and Digatrade Financial

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

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

Diversification Opportunities for Deere and Digatrade Financial

0.0

Correlation Coefficient

Deere  Digatrade Financial

Pay attention - limited upside

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

Pair Corralation between Deere and Digatrade Financial

If you would invest  39,375  in Deere Company on September 13, 2024 and sell it today you would earn a total of  4,645  from holding Deere Company or generate 11.8% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Deere Company  vs.  Digatrade Financial Corp

Deere Company

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Deere Company are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating technical and fundamental indicators, Deere exhibited solid returns over the last few months and may actually be approaching a breakup point.

Digatrade Financial Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Digatrade Financial Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Digatrade Financial is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Deere and Digatrade Financial

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

The idea behind Deere Company and Digatrade Financial Corp 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.