Correlation Between Ford and North Chemical
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By analyzing existing cross correlation between Ford Motor and North Chemical Industries, you can compare the effects of market volatilities on Ford and North Chemical 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 North Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and North Chemical.
Diversification Opportunities for Ford and North Chemical
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Ford and North is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and North Chemical Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on North Chemical Industries 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 North Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of North Chemical Industries has no effect on the direction of Ford i.e., Ford and North Chemical go up and down completely randomly.
Pair Corralation between Ford and North Chemical
Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the North Chemical. But the stock apears to be less risky and, when comparing its historical volatility, Ford Motor is 1.35 times less risky than North Chemical. The stock trades about -0.01 of its potential returns per unit of risk. The North Chemical Industries is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 1,006 in North Chemical Industries on September 12, 2024 and sell it today you would earn a total of 192.00 from holding North Chemical Industries or generate 19.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 98.39% |
| Values | Daily Returns |
Ford Motor vs. North Chemical Industries
Performance |
| Timeline |
| Ford Motor |
| North Chemical Industries |
Ford and North Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and North Chemical
The main advantage of trading using opposite Ford and North Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, North Chemical 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 North Chemical will offset losses from the drop in North Chemical's long position.The idea behind Ford Motor and North Chemical Industries 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.| North Chemical vs. Xiamen Goldenhome Co | North Chemical vs. Tongyu Communication | North Chemical vs. Sichuan Jinshi Technology | North Chemical vs. Shanghai Shuixing Home |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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