Correlation Between Ford and Castles Technology
Can any of the company-specific risk be diversified away by investing in both Ford and Castles 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 Castles 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 Castles Technology Co, you can compare the effects of market volatilities on Ford and Castles 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 Castles Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Castles Technology.
Diversification Opportunities for Ford and Castles Technology
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Ford and Castles is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Castles Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Castles 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 Castles Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Castles Technology has no effect on the direction of Ford i.e., Ford and Castles Technology go up and down completely randomly.
Pair Corralation between Ford and Castles Technology
Taking into account the 90-day investment horizon Ford is expected to generate 42.95 times less return on investment than Castles Technology. But when comparing it to its historical volatility, Ford Motor is 1.29 times less risky than Castles Technology. It trades about 0.0 of its potential returns per unit of risk. Castles Technology Co is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 6,383 in Castles Technology Co on October 13, 2024 and sell it today you would earn a total of 1,707 from holding Castles Technology Co or generate 26.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 97.38% |
| Values | Daily Returns |
Ford Motor vs. Castles Technology Co
Performance |
| Timeline |
| Ford Motor |
| Castles Technology |
Ford and Castles Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Castles Technology
The main advantage of trading using opposite Ford and Castles Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Castles 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 Castles Technology will offset losses from the drop in Castles Technology's long position.The idea behind Ford Motor and Castles 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.| Castles Technology vs. AVerMedia Technologies | Castles Technology vs. Min Aik Technology | Castles Technology vs. Jean Co | Castles Technology vs. Uniform Industrial 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 Transaction History module to view history of all your transactions and understand their impact on performance.
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