Correlation Between Ford and Jean
Can any of the company-specific risk be diversified away by investing in both Ford and Jean 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 Jean into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Jean Co, you can compare the effects of market volatilities on Ford and Jean 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 Jean. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Jean.
Diversification Opportunities for Ford and Jean
Good diversification
The 3 months correlation between Ford and Jean is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Jean Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jean 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 Jean. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jean has no effect on the direction of Ford i.e., Ford and Jean go up and down completely randomly.
Pair Corralation between Ford and Jean
Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the Jean. But the stock apears to be less risky and, when comparing its historical volatility, Ford Motor is 1.18 times less risky than Jean. The stock trades about 0.0 of its potential returns per unit of risk. The Jean Co is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 1,815 in Jean Co on September 4, 2024 and sell it today you would earn a total of 805.00 from holding Jean Co or generate 44.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.39% |
| Values | Daily Returns |
Ford Motor vs. Jean Co
Performance |
| Timeline |
| Ford Motor |
| Jean |
Ford and Jean Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Jean
The main advantage of trading using opposite Ford and Jean positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Jean 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 Jean will offset losses from the drop in Jean's long position.The idea behind Ford Motor and Jean Co 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.| Jean vs. Shuttle | Jean vs. Amtran Technology Co | Jean vs. AVerMedia Technologies | Jean vs. Gigastorage Corp |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
Other Complementary Tools
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets |