Correlation Between Ford and Eightco Holdings
Can any of the company-specific risk be diversified away by investing in both Ford and Eightco Holdings 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 Eightco Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Eightco Holdings, you can compare the effects of market volatilities on Ford and Eightco Holdings 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 Eightco Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Eightco Holdings.
Diversification Opportunities for Ford and Eightco Holdings
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Ford and Eightco is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Eightco Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eightco Holdings 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 Eightco Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eightco Holdings has no effect on the direction of Ford i.e., Ford and Eightco Holdings go up and down completely randomly.
Pair Corralation between Ford and Eightco Holdings
Taking into account the 90-day investment horizon Ford Motor is expected to generate 0.44 times more return on investment than Eightco Holdings. However, Ford Motor is 2.29 times less risky than Eightco Holdings. It trades about -0.01 of its potential returns per unit of risk. Eightco Holdings is currently generating about -0.03 per unit of risk. If you would invest 1,208 in Ford Motor on February 13, 2024 and sell it today you would lose (9.00) from holding Ford Motor or give up 0.75% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Ford Motor vs. Eightco Holdings
Performance |
Timeline |
Ford Motor |
Eightco Holdings |
Ford and Eightco Holdings Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Ford and Eightco Holdings
The main advantage of trading using opposite Ford and Eightco Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Eightco Holdings 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 Eightco Holdings will offset losses from the drop in Eightco Holdings' long position.The idea behind Ford Motor and Eightco Holdings 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.Eightco Holdings vs. Ardagh Metal Packaging | Eightco Holdings vs. WestRock Co | Eightco Holdings vs. Avery Dennison Corp | Eightco Holdings vs. Amcor PLC |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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