Correlation Between Ford and Sampo Corp
Can any of the company-specific risk be diversified away by investing in both Ford and Sampo Corp 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 Sampo Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Sampo Corp, you can compare the effects of market volatilities on Ford and Sampo Corp 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 Sampo Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Sampo Corp.
Diversification Opportunities for Ford and Sampo Corp
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ford and Sampo is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Sampo Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sampo Corp 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 Sampo Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sampo Corp has no effect on the direction of Ford i.e., Ford and Sampo Corp go up and down completely randomly.
Pair Corralation between Ford and Sampo Corp
Taking into account the 90-day investment horizon Ford is expected to generate 1.4 times less return on investment than Sampo Corp. In addition to that, Ford is 2.02 times more volatile than Sampo Corp. It trades about 0.01 of its total potential returns per unit of risk. Sampo Corp is currently generating about 0.01 per unit of volatility. If you would invest 2,660 in Sampo Corp on October 21, 2024 and sell it today you would earn a total of 135.00 from holding Sampo Corp or generate 5.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.59% |
| Values | Daily Returns |
Ford Motor vs. Sampo Corp
Performance |
| Timeline |
| Ford Motor |
| Sampo Corp |
Ford and Sampo Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Sampo Corp
The main advantage of trading using opposite Ford and Sampo Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Sampo Corp 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 Sampo Corp will offset losses from the drop in Sampo Corp's long position.The idea behind Ford Motor and Sampo Corp 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.| Sampo Corp vs. Carnival Industrial Corp | Sampo Corp vs. De Licacy Industrial | Sampo Corp vs. Tex Ray Industrial Co | Sampo Corp vs. Reward Wool Industry |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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