Correlation Between Deere and Integrated Ventures

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

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

Diversification Opportunities for Deere and Integrated Ventures

-0.61

Correlation Coefficient

Deere  Integrated Ventures

Excellent diversification

The 3 months correlation between Deere and Integrated is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Deere Company and Integrated Ventures in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Integrated Ventures 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 Integrated Ventures. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Integrated Ventures has no effect on the direction of Deere i.e., Deere and Integrated Ventures go up and down completely randomly.

Pair Corralation between Deere and Integrated Ventures

Allowing for the 90-day total investment horizon Deere Company is expected to generate 0.18 times more return on investment than Integrated Ventures. However, Deere Company is 5.56 times less risky than Integrated Ventures. It trades about 0.05 of its potential returns per unit of risk. Integrated Ventures is currently generating about -0.24 per unit of risk. If you would invest  46,118  in Deere Company on December 2, 2024 and sell it today you would earn a total of  1,961  from holding Deere Company or generate 4.25% return on investment over 90 days.

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

Deere Company  vs.  Integrated Ventures

Deere Company

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Deere Company are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Deere is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Integrated Ventures

Risk-Adjusted Performance

Very Weak

Over the last 90 days Integrated Ventures has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Deere and Integrated Ventures

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

The idea behind Deere Company and Integrated Ventures 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.