Correlation Between Ford and SEDANA MEDICAL
Can any of the company-specific risk be diversified away by investing in both Ford and SEDANA MEDICAL 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 SEDANA MEDICAL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and SEDANA MEDICAL AB, you can compare the effects of market volatilities on Ford and SEDANA MEDICAL 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 SEDANA MEDICAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and SEDANA MEDICAL.
Diversification Opportunities for Ford and SEDANA MEDICAL
-0.83 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Ford and SEDANA is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and SEDANA MEDICAL AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SEDANA MEDICAL AB 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 SEDANA MEDICAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SEDANA MEDICAL AB has no effect on the direction of Ford i.e., Ford and SEDANA MEDICAL go up and down completely randomly.
Pair Corralation between Ford and SEDANA MEDICAL
Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the SEDANA MEDICAL. But the stock apears to be less risky and, when comparing its historical volatility, Ford Motor is 2.22 times less risky than SEDANA MEDICAL. The stock trades about 0.0 of its potential returns per unit of risk. The SEDANA MEDICAL AB is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 197.00 in SEDANA MEDICAL AB on November 28, 2024 and sell it today you would lose (45.00) from holding SEDANA MEDICAL AB or give up 22.84% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 98.75% |
| Values | Daily Returns |
Ford Motor vs. SEDANA MEDICAL AB
Performance |
| Timeline |
| Ford Motor |
| SEDANA MEDICAL AB |
Ford and SEDANA MEDICAL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and SEDANA MEDICAL
The main advantage of trading using opposite Ford and SEDANA MEDICAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, SEDANA MEDICAL 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 SEDANA MEDICAL will offset losses from the drop in SEDANA MEDICAL's long position.The idea behind Ford Motor and SEDANA MEDICAL AB 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.| SEDANA MEDICAL vs. Abbott Laboratories | SEDANA MEDICAL vs. Medtronic PLC | SEDANA MEDICAL vs. Stryker | SEDANA MEDICAL vs. Boston Scientific |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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