Correlation Between Abbott Laboratories and Deere
Can any of the company-specific risk be diversified away by investing in both Abbott Laboratories 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 Abbott Laboratories and Deere into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Abbott Laboratories and Deere Company, you can compare the effects of market volatilities on Abbott Laboratories 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 Abbott Laboratories with a short position of Deere. Check out your portfolio center. Please also check ongoing floating volatility patterns of Abbott Laboratories and Deere.
Diversification Opportunities for Abbott Laboratories and Deere
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Abbott and Deere is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Abbott Laboratories and Deere Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deere Company and Abbott Laboratories 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 Abbott Laboratories 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 Abbott Laboratories i.e., Abbott Laboratories and Deere go up and down completely randomly.
Pair Corralation between Abbott Laboratories and Deere
Considering the 90-day investment horizon Abbott Laboratories is expected to under-perform the Deere. But the stock apears to be less risky and, when comparing its historical volatility, Abbott Laboratories is 1.02 times less risky than Deere. The stock trades about -0.08 of its potential returns per unit of risk. The Deere Company is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 39,656 in Deere Company on January 25, 2024 and sell it today you would lose (137.00) from holding Deere Company or give up 0.35% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Abbott Laboratories vs. Deere Company
Performance |
Timeline |
Abbott Laboratories |
Deere Company |
Abbott Laboratories and Deere Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Abbott Laboratories and Deere
The main advantage of trading using opposite Abbott Laboratories and Deere positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Abbott Laboratories 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.Abbott Laboratories vs. Neuropace | Abbott Laboratories vs. Electromed | Abbott Laboratories vs. Orthopediatrics Corp | Abbott Laboratories vs. SurModics |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
Other Complementary Tools
Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
AI Investment Finder Use AI to screen and filter profitable investment opportunities | |
Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
Stocks Directory Find actively traded stocks across global markets | |
FinTech Suite Use AI to screen and filter profitable investment opportunities |