Correlation Between Ford and Flow Traders
Can any of the company-specific risk be diversified away by investing in both Ford and Flow Traders 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 Flow Traders into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Flow Traders NV, you can compare the effects of market volatilities on Ford and Flow Traders 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 Flow Traders. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Flow Traders.
Diversification Opportunities for Ford and Flow Traders
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Ford and Flow is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Flow Traders NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Flow Traders 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 Flow Traders. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Flow Traders NV has no effect on the direction of Ford i.e., Ford and Flow Traders go up and down completely randomly.
Pair Corralation between Ford and Flow Traders
Taking into account the 90-day investment horizon Ford is expected to generate 1.58 times less return on investment than Flow Traders. But when comparing it to its historical volatility, Ford Motor is 1.04 times less risky than Flow Traders. It trades about 0.16 of its potential returns per unit of risk. Flow Traders NV is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 2,196 in Flow Traders NV on November 2, 2024 and sell it today you would earn a total of 210.00 from holding Flow Traders NV or generate 9.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 90.48% |
| Values | Daily Returns |
Ford Motor vs. Flow Traders NV
Performance |
| Timeline |
| Ford Motor |
| Flow Traders NV |
Ford and Flow Traders Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Flow Traders
The main advantage of trading using opposite Ford and Flow Traders positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Flow Traders 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 Flow Traders will offset losses from the drop in Flow Traders' long position.The idea behind Ford Motor and Flow Traders 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.| Flow Traders vs. Norwegian Air Shuttle | Flow Traders vs. Polar Capital Technology | Flow Traders vs. Raytheon Technologies Corp | Flow Traders vs. Virgin Wines UK |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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