Correlation Between Ford and Pfeiffer Vacuum
Can any of the company-specific risk be diversified away by investing in both Ford and Pfeiffer Vacuum 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 Pfeiffer Vacuum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Pfeiffer Vacuum Technology, you can compare the effects of market volatilities on Ford and Pfeiffer Vacuum 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 Pfeiffer Vacuum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Pfeiffer Vacuum.
Diversification Opportunities for Ford and Pfeiffer Vacuum
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Ford and Pfeiffer is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Pfeiffer Vacuum Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pfeiffer Vacuum Tech 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 Pfeiffer Vacuum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pfeiffer Vacuum Tech has no effect on the direction of Ford i.e., Ford and Pfeiffer Vacuum go up and down completely randomly.
Pair Corralation between Ford and Pfeiffer Vacuum
Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the Pfeiffer Vacuum. In addition to that, Ford is 4.55 times more volatile than Pfeiffer Vacuum Technology. It trades about 0.0 of its total potential returns per unit of risk. Pfeiffer Vacuum Technology is currently generating about 0.04 per unit of volatility. If you would invest 14,437 in Pfeiffer Vacuum Technology on August 31, 2024 and sell it today you would earn a total of 1,053 from holding Pfeiffer Vacuum Technology or generate 7.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 98.94% |
| Values | Daily Returns |
Ford Motor vs. Pfeiffer Vacuum Technology
Performance |
| Timeline |
| Ford Motor |
| Pfeiffer Vacuum Tech |
Ford and Pfeiffer Vacuum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Pfeiffer Vacuum
The main advantage of trading using opposite Ford and Pfeiffer Vacuum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Pfeiffer Vacuum 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 Pfeiffer Vacuum will offset losses from the drop in Pfeiffer Vacuum's long position.The idea behind Ford Motor and Pfeiffer Vacuum Technology 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.| Pfeiffer Vacuum vs. Neometals | Pfeiffer Vacuum vs. Coor Service Management | Pfeiffer Vacuum vs. Aeorema Communications Plc | Pfeiffer Vacuum vs. JLEN Environmental Assets |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
Other Complementary Tools
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account |