Correlation Between Ideanomics and Deere

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

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

Diversification Opportunities for Ideanomics and Deere

0.2

Correlation Coefficient

Ideanomics  Deere

Modest diversification

The 3 months correlation between Ideanomics and Deere is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Ideanomics and Deere Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deere Company and Ideanomics 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 Ideanomics are associated (or correlated) with Deere. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deere Company has no effect on the direction of Ideanomics i.e., Ideanomics and Deere go up and down completely randomly.

Pair Corralation between Ideanomics and Deere

Given the investment horizon of 90 days Ideanomics is expected to generate 36.96 times more return on investment than Deere. However, Ideanomics is 36.96 times more volatile than Deere Company. It trades about 0.15 of its potential returns per unit of risk. Deere Company is currently generating about 0.1 per unit of risk. If you would invest  10.00  in Ideanomics on September 18, 2024 and sell it today you would lose (9.80) from holding Ideanomics or give up 98.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Ideanomics  vs.  Deere Company

Ideanomics

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ideanomics are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady technical and fundamental indicators, Ideanomics showed solid returns over the last few months and may actually be approaching a breakup point.

Deere Company

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Deere Company are ranked lower than 7 (%) 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 January 2025.

Pair Trading with Ideanomics and Deere

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

The idea behind Ideanomics and Deere Company 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.