Correlation Between Ford and Highbroad Advanced
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By analyzing existing cross correlation between Ford Motor and Highbroad Advanced Material, you can compare the effects of market volatilities on Ford and Highbroad Advanced 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 Highbroad Advanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Highbroad Advanced.
Diversification Opportunities for Ford and Highbroad Advanced
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Ford and Highbroad is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Highbroad Advanced Material in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Highbroad Advanced 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 Highbroad Advanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Highbroad Advanced has no effect on the direction of Ford i.e., Ford and Highbroad Advanced go up and down completely randomly.
Pair Corralation between Ford and Highbroad Advanced
Taking into account the 90-day investment horizon Ford is expected to generate 4.77 times less return on investment than Highbroad Advanced. But when comparing it to its historical volatility, Ford Motor is 1.62 times less risky than Highbroad Advanced. It trades about 0.09 of its potential returns per unit of risk. Highbroad Advanced Material is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 1,307 in Highbroad Advanced Material on November 7, 2024 and sell it today you would earn a total of 167.00 from holding Highbroad Advanced Material or generate 12.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 80.95% |
| Values | Daily Returns |
Ford Motor vs. Highbroad Advanced Material
Performance |
| Timeline |
| Ford Motor |
| Highbroad Advanced |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Ford and Highbroad Advanced Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Highbroad Advanced
The main advantage of trading using opposite Ford and Highbroad Advanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Highbroad Advanced 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 Highbroad Advanced will offset losses from the drop in Highbroad Advanced's long position.The idea behind Ford Motor and Highbroad Advanced Material 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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