Correlation Between Ford and Amtran Technology
Can any of the company-specific risk be diversified away by investing in both Ford and Amtran Technology 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 Amtran Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Amtran Technology Co, you can compare the effects of market volatilities on Ford and Amtran Technology 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 Amtran Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Amtran Technology.
Diversification Opportunities for Ford and Amtran Technology
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Ford and Amtran is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Amtran Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amtran Technology 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 Amtran Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amtran Technology has no effect on the direction of Ford i.e., Ford and Amtran Technology go up and down completely randomly.
Pair Corralation between Ford and Amtran Technology
Taking into account the 90-day investment horizon Ford is expected to generate 6.62 times less return on investment than Amtran Technology. But when comparing it to its historical volatility, Ford Motor is 1.1 times less risky than Amtran Technology. It trades about 0.01 of its potential returns per unit of risk. Amtran Technology Co is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1,015 in Amtran Technology Co on August 27, 2024 and sell it today you would earn a total of 985.00 from holding Amtran Technology Co or generate 97.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 96.77% |
| Values | Daily Returns |
Ford Motor vs. Amtran Technology Co
Performance |
| Timeline |
| Ford Motor |
| Amtran Technology |
Ford and Amtran Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Amtran Technology
The main advantage of trading using opposite Ford and Amtran Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Amtran Technology 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 Amtran Technology will offset losses from the drop in Amtran Technology's long position.The idea behind Ford Motor and Amtran Technology 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.| Amtran Technology vs. Taiwan Semiconductor Manufacturing | Amtran Technology vs. Hon Hai Precision | Amtran Technology vs. MediaTek | Amtran Technology vs. Chunghwa Telecom 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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