Correlation Between PULSION Medical and Deere

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

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

Diversification Opportunities for PULSION Medical and Deere

0.48

Correlation Coefficient

PULSION Medical  Deere

Very weak diversification

The 3 months correlation between PULSION and Deere is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding PULSION Medical Systems and Deere Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deere Company and PULSION Medical 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 PULSION Medical Systems 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 PULSION Medical i.e., PULSION Medical and Deere go up and down completely randomly.

Pair Corralation between PULSION Medical and Deere

Assuming the 90 days trading horizon PULSION Medical Systems is expected to generate 0.51 times more return on investment than Deere. However, PULSION Medical Systems is 1.96 times less risky than Deere. It trades about -0.14 of its potential returns per unit of risk. Deere Company is currently generating about -0.3 per unit of risk. If you would invest  1,620  in PULSION Medical Systems on October 9, 2024 and sell it today you would lose (20.00) from holding PULSION Medical Systems or give up 1.23% of portfolio value over 90 days.

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

PULSION Medical Systems  vs.  Deere Company

PULSION Medical Systems

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PULSION Medical Systems has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, PULSION Medical is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

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 comparatively uncertain basic indicators, Deere may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with PULSION Medical and Deere

The main advantage of trading using opposite PULSION Medical and Deere positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PULSION Medical 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 PULSION Medical Systems 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.

Check out your portfolio center.

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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.