Correlation Between Travelers Companies and Deere

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Can any of the company-specific risk be diversified away by investing in both Travelers Companies 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 Travelers Companies and Deere into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Travelers Companies and Deere Company, you can compare the effects of market volatilities on Travelers Companies 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 Travelers Companies with a short position of Deere. Check out your portfolio center. Please also check ongoing floating volatility patterns of Travelers Companies and Deere.

Diversification Opportunities for Travelers Companies and Deere

0.25
  Correlation Coefficient

Modest diversification

The 3 months correlation between Travelers and Deere is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding The Travelers Companies and Deere Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deere Company and Travelers Companies 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 The Travelers Companies 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 Travelers Companies i.e., Travelers Companies and Deere go up and down completely randomly.

Pair Corralation between Travelers Companies and Deere

Considering the 90-day investment horizon The Travelers Companies is expected to under-perform the Deere. But the stock apears to be less risky and, when comparing its historical volatility, The Travelers Companies is 1.31 times less risky than Deere. The stock trades about -0.09 of its potential returns per unit of risk. The Deere Company is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  29,213  in Deere Company on July 2, 2022 and sell it today you would earn a total of  4,887  from holding Deere Company or generate 16.73% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

The Travelers Companies  vs.  Deere Company

 Performance (%) 
       Timeline  
The Travelers Companies 
Travelers Performance
0 of 100
Over the last 90 days The Travelers Companies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest conflicting performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Travelers Price Channel

Deere Company 
Deere Performance
11 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Deere Company are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather conflicting technical and fundamental indicators, Deere exhibited solid returns over the last few months and may actually be approaching a breakup point.

Deere Price Channel

Travelers Companies and Deere Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Travelers Companies and Deere

The main advantage of trading using opposite Travelers Companies and Deere positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Travelers Companies 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.
Travelers Companies vs. Amazon Inc
The idea behind The Travelers Companies 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.
Deere vs. Amazon Inc
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 Focused Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.

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