Correlation Between Blue Bird and Deere

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

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

Diversification Opportunities for Blue Bird and Deere

0.51

Correlation Coefficient

Blue Bird  Deere

Very weak diversification

The 3 months correlation between Blue and Deere is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Blue Bird Corp and Deere Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deere Company and Blue Bird 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 Blue Bird Corp 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 Blue Bird i.e., Blue Bird and Deere go up and down completely randomly.

Pair Corralation between Blue Bird and Deere

Given the investment horizon of 90 days Blue Bird Corp is expected to generate 1.22 times more return on investment than Deere. However, Blue Bird is 1.22 times more volatile than Deere Company. It trades about 0.16 of its potential returns per unit of risk. Deere Company is currently generating about 0.06 per unit of risk. If you would invest  3,722  in Blue Bird Corp on May 8, 2025 and sell it today you would earn a total of  639.00  from holding Blue Bird Corp or generate 17.17% return on investment over 90 days.

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

Blue Bird Corp  vs.  Deere Company

Blue Bird Corp

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Blue Bird Corp are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak fundamental drivers, Blue Bird exhibited solid returns over the last few months and may actually be approaching a breakup point.

Deere Company

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Deere Company are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Deere is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Blue Bird and Deere

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