Correlation Between Ford and Millennium Group
Can any of the company-specific risk be diversified away by investing in both Ford and Millennium Group 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 Millennium Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Millennium Group International, you can compare the effects of market volatilities on Ford and Millennium Group 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 Millennium Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Millennium Group.
Diversification Opportunities for Ford and Millennium Group
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ford and Millennium is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Millennium Group International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Millennium Group Int 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 Millennium Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Millennium Group Int has no effect on the direction of Ford i.e., Ford and Millennium Group go up and down completely randomly.
Pair Corralation between Ford and Millennium Group
Given the investment horizon of 90 days Ford Motor is expected to generate 0.16 times more return on investment than Millennium Group. However, Ford Motor is 6.24 times less risky than Millennium Group. It trades about -0.1 of its potential returns per unit of risk. Millennium Group International is currently generating about -0.08 per unit of risk. If you would invest 2,466 in Ford Motor on August 24, 2024 and sell it today you would lose (26.00) from holding Ford Motor or give up 1.05% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ford Motor vs. Millennium Group International
Performance |
| Timeline |
| Ford Motor |
| Millennium Group Int |
Ford and Millennium Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Millennium Group
The main advantage of trading using opposite Ford and Millennium Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Millennium Group 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 Millennium Group will offset losses from the drop in Millennium Group's long position.The idea behind Ford Motor and Millennium Group International 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.| Millennium Group vs. Hudson Technologies | Millennium Group vs. Universal Music Group | Millennium Group vs. Inflection Point Acquisition | Millennium Group vs. NL Industries |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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