Correlation Between Ford and EV Advanced
Can any of the company-specific risk be diversified away by investing in both Ford and EV Advanced 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 EV Advanced into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and EV Advanced Material, you can compare the effects of market volatilities on Ford and EV Advanced 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 EV Advanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and EV Advanced.
Diversification Opportunities for Ford and EV Advanced
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ford and 131400 is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and EV Advanced Material in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EV Advanced Material 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 EV Advanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EV Advanced Material has no effect on the direction of Ford i.e., Ford and EV Advanced go up and down completely randomly.
Pair Corralation between Ford and EV Advanced
Taking into account the 90-day investment horizon Ford Motor is expected to generate 0.5 times more return on investment than EV Advanced. However, Ford Motor is 2.01 times less risky than EV Advanced. It trades about 0.01 of its potential returns per unit of risk. EV Advanced Material is currently generating about 0.0 per unit of risk. If you would invest 1,135 in Ford Motor on August 25, 2024 and sell it today you would lose (17.00) from holding Ford Motor or give up 1.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 96.85% |
| Values | Daily Returns |
Ford Motor vs. EV Advanced Material
Performance |
| Timeline |
| Ford Motor |
| EV Advanced Material |
Ford and EV Advanced Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and EV Advanced
The main advantage of trading using opposite Ford and EV Advanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, EV Advanced 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 EV Advanced will offset losses from the drop in EV Advanced's long position.The idea behind Ford Motor and EV Advanced Material 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.| EV Advanced vs. Display Tech Co | EV Advanced vs. Lion Chemtech Co | EV Advanced vs. Amogreentech Co | EV Advanced vs. Vitzro Tech 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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