Correlation Between Ford and Aena SME
Can any of the company-specific risk be diversified away by investing in both Ford and Aena SME 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 Aena SME into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Aena SME SA, you can compare the effects of market volatilities on Ford and Aena SME 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 Aena SME. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Aena SME.
Diversification Opportunities for Ford and Aena SME
Significant diversification
The 3 months correlation between Ford and Aena is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Aena SME SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aena SME 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 Aena SME. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aena SME SA has no effect on the direction of Ford i.e., Ford and Aena SME go up and down completely randomly.
Pair Corralation between Ford and Aena SME
Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the Aena SME. In addition to that, Ford is 2.01 times more volatile than Aena SME SA. It trades about 0.0 of its total potential returns per unit of risk. Aena SME SA is currently generating about 0.1 per unit of volatility. If you would invest 13,589 in Aena SME SA on August 31, 2024 and sell it today you would earn a total of 6,771 from holding Aena SME SA or generate 49.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 98.42% |
| Values | Daily Returns |
Ford Motor vs. Aena SME SA
Performance |
| Timeline |
| Ford Motor |
| Aena SME SA |
Ford and Aena SME Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Aena SME
The main advantage of trading using opposite Ford and Aena SME positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Aena SME 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 Aena SME will offset losses from the drop in Aena SME's long position.The idea behind Ford Motor and Aena SME 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.| Aena SME vs. AENA SME UNSPADR110 | Aena SME vs. Superior Plus Corp | Aena SME vs. NMI Holdings | Aena SME vs. Origin Agritech |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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