Correlation Between Ford and INTER CARS
Can any of the company-specific risk be diversified away by investing in both Ford and INTER CARS 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 INTER CARS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and INTER CARS SA, you can compare the effects of market volatilities on Ford and INTER CARS 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 INTER CARS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and INTER CARS.
Diversification Opportunities for Ford and INTER CARS
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Ford and INTER is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and INTER CARS SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INTER CARS SA 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 INTER CARS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INTER CARS SA has no effect on the direction of Ford i.e., Ford and INTER CARS go up and down completely randomly.
Pair Corralation between Ford and INTER CARS
Taking into account the 90-day investment horizon Ford Motor is expected to generate 1.12 times more return on investment than INTER CARS. However, Ford is 1.12 times more volatile than INTER CARS SA. It trades about 0.18 of its potential returns per unit of risk. INTER CARS SA is currently generating about -0.01 per unit of risk. If you would invest 1,027 in Ford Motor on August 30, 2024 and sell it today you would earn a total of 83.00 from holding Ford Motor or generate 8.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ford Motor vs. INTER CARS SA
Performance |
| Timeline |
| Ford Motor |
| INTER CARS SA |
Ford and INTER CARS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and INTER CARS
The main advantage of trading using opposite Ford and INTER CARS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, INTER CARS 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 INTER CARS will offset losses from the drop in INTER CARS's long position.The idea behind Ford Motor and INTER CARS SA 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.| INTER CARS vs. PT Astra International | INTER CARS vs. Superior Plus Corp | INTER CARS vs. NMI Holdings | INTER CARS vs. SIVERS SEMICONDUCTORS AB |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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