Correlation Between Ford and ABC TRANSPORT
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By analyzing existing cross correlation between Ford Motor and ABC TRANSPORT PLC, you can compare the effects of market volatilities on Ford and ABC TRANSPORT 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 ABC TRANSPORT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and ABC TRANSPORT.
Diversification Opportunities for Ford and ABC TRANSPORT
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Ford and ABC is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and ABC TRANSPORT PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ABC TRANSPORT PLC 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 ABC TRANSPORT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ABC TRANSPORT PLC has no effect on the direction of Ford i.e., Ford and ABC TRANSPORT go up and down completely randomly.
Pair Corralation between Ford and ABC TRANSPORT
Taking into account the 90-day investment horizon Ford is expected to generate 5.77 times less return on investment than ABC TRANSPORT. But when comparing it to its historical volatility, Ford Motor is 1.79 times less risky than ABC TRANSPORT. It trades about 0.02 of its potential returns per unit of risk. ABC TRANSPORT PLC is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 85.00 in ABC TRANSPORT PLC on August 28, 2024 and sell it today you would earn a total of 40.00 from holding ABC TRANSPORT PLC or generate 47.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 97.13% |
| Values | Daily Returns |
Ford Motor vs. ABC TRANSPORT PLC
Performance |
| Timeline |
| Ford Motor |
| ABC TRANSPORT PLC |
Ford and ABC TRANSPORT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and ABC TRANSPORT
The main advantage of trading using opposite Ford and ABC TRANSPORT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, ABC TRANSPORT 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 ABC TRANSPORT will offset losses from the drop in ABC TRANSPORT's long position.The idea behind Ford Motor and ABC TRANSPORT PLC 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.| ABC TRANSPORT vs. CORNERSTONE INSURANCE PLC | ABC TRANSPORT vs. NIGERIAN BREWERIES PLC | ABC TRANSPORT vs. ECOBANK TRANSNATIONAL INCORPORATED | ABC TRANSPORT vs. GOLDEN GUINEA BREWERIES |
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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