Correlation Between Ford and MiTAC Holdings
Can any of the company-specific risk be diversified away by investing in both Ford and MiTAC Holdings 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 MiTAC Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and MiTAC Holdings Corp, you can compare the effects of market volatilities on Ford and MiTAC Holdings 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 MiTAC Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and MiTAC Holdings.
Diversification Opportunities for Ford and MiTAC Holdings
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Ford and MiTAC is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and MiTAC Holdings Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MiTAC Holdings 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 MiTAC Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MiTAC Holdings Corp has no effect on the direction of Ford i.e., Ford and MiTAC Holdings go up and down completely randomly.
Pair Corralation between Ford and MiTAC Holdings
Taking into account the 90-day investment horizon Ford is expected to generate 8.87 times less return on investment than MiTAC Holdings. But when comparing it to its historical volatility, Ford Motor is 1.62 times less risky than MiTAC Holdings. It trades about 0.08 of its potential returns per unit of risk. MiTAC Holdings Corp is currently generating about 0.43 of returns per unit of risk over similar time horizon. If you would invest 4,500 in MiTAC Holdings Corp on August 30, 2024 and sell it today you would earn a total of 3,880 from holding MiTAC Holdings Corp or generate 86.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ford Motor vs. MiTAC Holdings Corp
Performance |
| Timeline |
| Ford Motor |
| MiTAC Holdings Corp |
Ford and MiTAC Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and MiTAC Holdings
The main advantage of trading using opposite Ford and MiTAC Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, MiTAC Holdings 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 MiTAC Holdings will offset losses from the drop in MiTAC Holdings' long position.The idea behind Ford Motor and MiTAC Holdings 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.| MiTAC Holdings vs. Wistron Corp | MiTAC Holdings vs. Getac Technology Corp | MiTAC Holdings vs. Inventec Corp | MiTAC Holdings vs. Pegatron Corp |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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