Correlation Between Ford and Amana Developing
Can any of the company-specific risk be diversified away by investing in both Ford and Amana Developing 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 Ford and Amana Developing into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Amana Developing World, you can compare the effects of market volatilities on Ford and Amana Developing 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 Ford with a short position of Amana Developing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Amana Developing.
Diversification Opportunities for Ford and Amana Developing
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ford and Amana is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Amana Developing World in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amana Developing World and Ford 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 Ford Motor are associated (or correlated) with Amana Developing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amana Developing World has no effect on the direction of Ford i.e., Ford and Amana Developing go up and down completely randomly.
Pair Corralation between Ford and Amana Developing
Taking into account the 90-day investment horizon Ford Motor is expected to generate 2.71 times more return on investment than Amana Developing. However, Ford is 2.71 times more volatile than Amana Developing World. It trades about 0.11 of its potential returns per unit of risk. Amana Developing World is currently generating about -0.04 per unit of risk. If you would invest 1,195 in Ford Motor on January 27, 2024 and sell it today you would earn a total of 109.00 from holding Ford Motor or generate 9.12% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Ford Motor vs. Amana Developing World
Performance |
Timeline |
Ford Motor |
Amana Developing World |
Ford and Amana Developing Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Ford and Amana Developing
The main advantage of trading using opposite Ford and Amana Developing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Amana Developing 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 Amana Developing will offset losses from the drop in Amana Developing's long position.Ford vs. Hycroft Mining Holding | Ford vs. Imperial Petroleum | Ford vs. Exela Technologies | Ford vs. Camber Energy |
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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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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