Correlation Between Ford and BlueFocus Communication
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By analyzing existing cross correlation between Ford Motor and BlueFocus Communication Group, you can compare the effects of market volatilities on Ford and BlueFocus Communication 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 BlueFocus Communication. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and BlueFocus Communication.
Diversification Opportunities for Ford and BlueFocus Communication
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Ford and BlueFocus is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and BlueFocus Communication Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BlueFocus Communication 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 BlueFocus Communication. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BlueFocus Communication has no effect on the direction of Ford i.e., Ford and BlueFocus Communication go up and down completely randomly.
Pair Corralation between Ford and BlueFocus Communication
Taking into account the 90-day investment horizon Ford is expected to generate 111.85 times less return on investment than BlueFocus Communication. But when comparing it to its historical volatility, Ford Motor is 2.56 times less risky than BlueFocus Communication. It trades about 0.01 of its potential returns per unit of risk. BlueFocus Communication Group is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest 760.00 in BlueFocus Communication Group on August 27, 2024 and sell it today you would earn a total of 370.00 from holding BlueFocus Communication Group or generate 48.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ford Motor vs. BlueFocus Communication Group
Performance |
| Timeline |
| Ford Motor |
| BlueFocus Communication |
Ford and BlueFocus Communication Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and BlueFocus Communication
The main advantage of trading using opposite Ford and BlueFocus Communication positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, BlueFocus Communication 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 BlueFocus Communication will offset losses from the drop in BlueFocus Communication's long position.The idea behind Ford Motor and BlueFocus Communication Group 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.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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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