Correlation Between Energy Focu and Ford
Can any of the company-specific risk be diversified away by investing in both Energy Focu and Ford 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 Energy Focu and Ford into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Energy Focu and Ford Motor, you can compare the effects of market volatilities on Energy Focu and Ford 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 Energy Focu with a short position of Ford. Check out your portfolio center. Please also check ongoing floating volatility patterns of Energy Focu and Ford.
Diversification Opportunities for Energy Focu and Ford
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Energy and Ford is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Energy Focu and Ford Motor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ford Motor and Energy Focu 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 Energy Focu are associated (or correlated) with Ford. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ford Motor has no effect on the direction of Energy Focu i.e., Energy Focu and Ford go up and down completely randomly.
Pair Corralation between Energy Focu and Ford
Given the investment horizon of 90 days Energy Focu is expected to generate 4.98 times more return on investment than Ford. However, Energy Focu is 4.98 times more volatile than Ford Motor. It trades about 0.01 of its potential returns per unit of risk. Ford Motor is currently generating about -0.14 per unit of risk. If you would invest 131.00 in Energy Focu on November 18, 2024 and sell it today you would lose (2.00) from holding Energy Focu or give up 1.53% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Energy Focu vs. Ford Motor
Performance |
| Timeline |
| Energy Focu |
| Ford Motor |
Energy Focu and Ford Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Energy Focu and Ford
The main advantage of trading using opposite Energy Focu and Ford positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Energy Focu position performs unexpectedly, Ford 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 Ford will offset losses from the drop in Ford's long position.| Energy Focu vs. Petros Pharmaceuticals | Energy Focu vs. Pioneer Power Solutions | Energy Focu vs. Ensysce Biosciences |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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