Correlation Between Ford and Mirle Automation
Can any of the company-specific risk be diversified away by investing in both Ford and Mirle Automation 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 Mirle Automation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Mirle Automation Corp, you can compare the effects of market volatilities on Ford and Mirle Automation 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 Mirle Automation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Mirle Automation.
Diversification Opportunities for Ford and Mirle Automation
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ford and Mirle is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Mirle Automation Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mirle Automation 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 Mirle Automation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mirle Automation Corp has no effect on the direction of Ford i.e., Ford and Mirle Automation go up and down completely randomly.
Pair Corralation between Ford and Mirle Automation
Taking into account the 90-day investment horizon Ford is expected to generate 9.11 times less return on investment than Mirle Automation. But when comparing it to its historical volatility, Ford Motor is 1.39 times less risky than Mirle Automation. It trades about 0.01 of its potential returns per unit of risk. Mirle Automation Corp is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 4,100 in Mirle Automation Corp on August 29, 2024 and sell it today you would earn a total of 3,350 from holding Mirle Automation Corp or generate 81.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 97.76% |
| Values | Daily Returns |
Ford Motor vs. Mirle Automation Corp
Performance |
| Timeline |
| Ford Motor |
| Mirle Automation Corp |
Ford and Mirle Automation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Mirle Automation
The main advantage of trading using opposite Ford and Mirle Automation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Mirle Automation 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 Mirle Automation will offset losses from the drop in Mirle Automation's long position.The idea behind Ford Motor and Mirle Automation 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.| Mirle Automation vs. Yulon Motor Co | Mirle Automation vs. Far Eastern Department | Mirle Automation vs. China Steel Corp | Mirle Automation vs. Chang Hwa Commercial |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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