Correlation Between Ford and Materialise
Can any of the company-specific risk be diversified away by investing in both Ford and Materialise 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 Materialise into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Materialise NV, you can compare the effects of market volatilities on Ford and Materialise 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 Materialise. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Materialise.
Diversification Opportunities for Ford and Materialise
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Ford and Materialise is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Materialise NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Materialise NV 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 Materialise. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Materialise NV has no effect on the direction of Ford i.e., Ford and Materialise go up and down completely randomly.
Pair Corralation between Ford and Materialise
Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the Materialise. But the stock apears to be less risky and, when comparing its historical volatility, Ford Motor is 1.48 times less risky than Materialise. The stock trades about 0.0 of its potential returns per unit of risk. The Materialise NV is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 590.00 in Materialise NV on August 29, 2024 and sell it today you would earn a total of 100.00 from holding Materialise NV or generate 16.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ford Motor vs. Materialise NV
Performance |
| Timeline |
| Ford Motor |
| Materialise NV |
Ford and Materialise Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Materialise
The main advantage of trading using opposite Ford and Materialise positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Materialise 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 Materialise will offset losses from the drop in Materialise's long position.The idea behind Ford Motor and Materialise NV 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.| Materialise vs. Apple Inc | Materialise vs. Apple Inc | Materialise vs. Apple Inc | Materialise vs. Apple Inc |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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