Correlation Between Ford and Evergreen Marine
Can any of the company-specific risk be diversified away by investing in both Ford and Evergreen Marine 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 Evergreen Marine into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Evergreen Marine Corp, you can compare the effects of market volatilities on Ford and Evergreen Marine 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 Evergreen Marine. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Evergreen Marine.
Diversification Opportunities for Ford and Evergreen Marine
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Ford and Evergreen is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Evergreen Marine Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evergreen Marine 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 Evergreen Marine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evergreen Marine Corp has no effect on the direction of Ford i.e., Ford and Evergreen Marine go up and down completely randomly.
Pair Corralation between Ford and Evergreen Marine
Taking into account the 90-day investment horizon Ford is expected to generate 9.62 times less return on investment than Evergreen Marine. But when comparing it to its historical volatility, Ford Motor is 1.13 times less risky than Evergreen Marine. It trades about 0.01 of its potential returns per unit of risk. Evergreen Marine Corp is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 10,750 in Evergreen Marine Corp on August 29, 2024 and sell it today you would earn a total of 10,650 from holding Evergreen Marine Corp or generate 99.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 97.76% |
| Values | Daily Returns |
Ford Motor vs. Evergreen Marine Corp
Performance |
| Timeline |
| Ford Motor |
| Evergreen Marine Corp |
Ford and Evergreen Marine Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Evergreen Marine
The main advantage of trading using opposite Ford and Evergreen Marine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Evergreen Marine 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 Evergreen Marine will offset losses from the drop in Evergreen Marine's long position.The idea behind Ford Motor and Evergreen Marine 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.| Evergreen Marine vs. Yulon Motor Co | Evergreen Marine vs. Far Eastern Department | Evergreen Marine vs. China Steel Corp | Evergreen Marine 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
Other Complementary Tools
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios |