Correlation Between Ford and INSUN Environmental
Can any of the company-specific risk be diversified away by investing in both Ford and INSUN Environmental 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 INSUN Environmental into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and INSUN Environmental New, you can compare the effects of market volatilities on Ford and INSUN Environmental 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 INSUN Environmental. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and INSUN Environmental.
Diversification Opportunities for Ford and INSUN Environmental
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ford and INSUN is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and INSUN Environmental New in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INSUN Environmental New 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 INSUN Environmental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INSUN Environmental New has no effect on the direction of Ford i.e., Ford and INSUN Environmental go up and down completely randomly.
Pair Corralation between Ford and INSUN Environmental
Taking into account the 90-day investment horizon Ford Motor is expected to generate 1.34 times more return on investment than INSUN Environmental. However, Ford is 1.34 times more volatile than INSUN Environmental New. It trades about 0.0 of its potential returns per unit of risk. INSUN Environmental New is currently generating about -0.05 per unit of risk. If you would invest 1,133 in Ford Motor on September 26, 2024 and sell it today you would lose (131.00) from holding Ford Motor or give up 11.56% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 96.78% |
| Values | Daily Returns |
Ford Motor vs. INSUN Environmental New
Performance |
| Timeline |
| Ford Motor |
| INSUN Environmental New |
Ford and INSUN Environmental Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and INSUN Environmental
The main advantage of trading using opposite Ford and INSUN Environmental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, INSUN Environmental 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 INSUN Environmental will offset losses from the drop in INSUN Environmental's long position.The idea behind Ford Motor and INSUN Environmental New 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.| INSUN Environmental vs. Korea Environment Technology | INSUN Environmental vs. Paradise Co | INSUN Environmental vs. Seoul Semiconductor Co | INSUN Environmental vs. JUSUNG ENGINEERING Co |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
Other Complementary Tools
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm |