Correlation Between Ford and LIG ES
Can any of the company-specific risk be diversified away by investing in both Ford and LIG ES 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 LIG ES into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and LIG ES SPAC, you can compare the effects of market volatilities on Ford and LIG ES 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 LIG ES. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and LIG ES.
Diversification Opportunities for Ford and LIG ES
Excellent diversification
The 3 months correlation between Ford and LIG is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and LIG ES SPAC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LIG ES SPAC 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 LIG ES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LIG ES SPAC has no effect on the direction of Ford i.e., Ford and LIG ES go up and down completely randomly.
Pair Corralation between Ford and LIG ES
Taking into account the 90-day investment horizon Ford Motor is expected to generate 0.7 times more return on investment than LIG ES. However, Ford Motor is 1.42 times less risky than LIG ES. It trades about 0.0 of its potential returns per unit of risk. LIG ES SPAC is currently generating about -0.07 per unit of risk. If you would invest 1,236 in Ford Motor on August 31, 2024 and sell it today you would lose (123.00) from holding Ford Motor or give up 9.95% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 97.06% |
| Values | Daily Returns |
Ford Motor vs. LIG ES SPAC
Performance |
| Timeline |
| Ford Motor |
| LIG ES SPAC |
Ford and LIG ES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and LIG ES
The main advantage of trading using opposite Ford and LIG ES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, LIG ES 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 LIG ES will offset losses from the drop in LIG ES's long position.The idea behind Ford Motor and LIG ES SPAC 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.| LIG ES vs. Seohee Construction Co | LIG ES vs. GS Engineering Construction | LIG ES vs. Dongbang Ship Machinery | LIG ES vs. Woorim Machinery 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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