Correlation Between Deere and Roma Green

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

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

Diversification Opportunities for Deere and Roma Green

-0.55

Correlation Coefficient

Deere  Roma Green

Excellent diversification

The 3 months correlation between Deere and Roma is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Deere Company and Roma Green Finance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Roma Green Finance 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 Roma Green. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Roma Green Finance has no effect on the direction of Deere i.e., Deere and Roma Green go up and down completely randomly.

Pair Corralation between Deere and Roma Green

Allowing for the 90-day total investment horizon Deere Company is expected to generate 0.37 times more return on investment than Roma Green. However, Deere Company is 2.68 times less risky than Roma Green. It trades about 0.08 of its potential returns per unit of risk. Roma Green Finance is currently generating about -0.1 per unit of risk. If you would invest  39,884  in Deere Company on October 6, 2024 and sell it today you would earn a total of  2,338  from holding Deere Company or generate 5.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	97.62%
Values	Daily Returns

Deere Company  vs.  Roma Green Finance

Deere Company

Risk-Adjusted Performance

3 of 100

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.

Roma Green Finance

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Roma Green Finance has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's primary indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Deere and Roma Green

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

The idea behind Deere Company and Roma Green Finance 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.