Correlation Between Lindsay and Deere

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

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

Diversification Opportunities for Lindsay and Deere

0.83

Correlation Coefficient

Lindsay  Deere

Very poor diversification

The 3 months correlation between Lindsay and Deere is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Lindsay and Deere Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deere Company and Lindsay 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 Lindsay 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 Lindsay i.e., Lindsay and Deere go up and down completely randomly.

Pair Corralation between Lindsay and Deere

Considering the 90-day investment horizon Lindsay is expected to generate 1.41 times less return on investment than Deere. But when comparing it to its historical volatility, Lindsay is 1.2 times less risky than Deere. It trades about 0.1 of its potential returns per unit of risk. Deere Company is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  42,842  in Deere Company on December 27, 2024 and sell it today you would earn a total of  5,520  from holding Deere Company or generate 12.88% return on investment over 90 days.

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

Lindsay  vs.  Deere Company

Lindsay

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Lindsay are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Lindsay may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Deere Company

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Deere Company are ranked lower than 9 (%) 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.

Pair Trading with Lindsay and Deere

The main advantage of trading using opposite Lindsay and Deere positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lindsay 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 Lindsay 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.