Correlation Between Ford and ADS Maritime
Can any of the company-specific risk be diversified away by investing in both Ford and ADS Maritime 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 ADS Maritime into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and ADS Maritime Holding, you can compare the effects of market volatilities on Ford and ADS Maritime 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 ADS Maritime. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and ADS Maritime.
Diversification Opportunities for Ford and ADS Maritime
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between Ford and ADS is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and ADS Maritime Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ADS Maritime Holding 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 ADS Maritime. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ADS Maritime Holding has no effect on the direction of Ford i.e., Ford and ADS Maritime go up and down completely randomly.
Pair Corralation between Ford and ADS Maritime
Taking into account the 90-day investment horizon Ford Motor is expected to generate 0.87 times more return on investment than ADS Maritime. However, Ford Motor is 1.15 times less risky than ADS Maritime. It trades about 0.02 of its potential returns per unit of risk. ADS Maritime Holding is currently generating about 0.01 per unit of risk. If you would invest 957.00 in Ford Motor on September 12, 2024 and sell it today you would earn a total of 99.00 from holding Ford Motor or generate 10.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Ford Motor vs. ADS Maritime Holding
Performance |
| Timeline |
| Ford Motor |
| ADS Maritime Holding |
Ford and ADS Maritime Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and ADS Maritime
The main advantage of trading using opposite Ford and ADS Maritime positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, ADS Maritime 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 ADS Maritime will offset losses from the drop in ADS Maritime's long position.The idea behind Ford Motor and ADS Maritime Holding 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.| ADS Maritime vs. Havila Shipping ASA | ADS Maritime vs. Shelf Drilling | ADS Maritime vs. Solstad Offsho | ADS Maritime vs. Eidesvik Offshore ASA |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
Other Complementary Tools
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| Commodity Directory Find actively traded commodities issued by global exchanges |