Correlation Between Ford and Ares Acquisition
Can any of the company-specific risk be diversified away by investing in both Ford and Ares Acquisition 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 Ares Acquisition into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Ares Acquisition, you can compare the effects of market volatilities on Ford and Ares Acquisition 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 Ares Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Ares Acquisition.
Diversification Opportunities for Ford and Ares Acquisition
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Ford and Ares is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Ares Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ares Acquisition 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 Ares Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ares Acquisition has no effect on the direction of Ford i.e., Ford and Ares Acquisition go up and down completely randomly.
Pair Corralation between Ford and Ares Acquisition
If you would invest 1,122 in Ford Motor on August 27, 2024 and sell it today you would earn a total of 18.00 from holding Ford Motor or generate 1.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 4.76% |
| Values | Daily Returns |
Ford Motor vs. Ares Acquisition
Performance |
| Timeline |
| Ford Motor |
| Ares Acquisition |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Ford and Ares Acquisition Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Ares Acquisition
The main advantage of trading using opposite Ford and Ares Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Ares Acquisition 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 Ares Acquisition will offset losses from the drop in Ares Acquisition's long position.The idea behind Ford Motor and Ares Acquisition 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.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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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