Correlation Between Ford and 361 Global
Can any of the company-specific risk be diversified away by investing in both Ford and 361 Global 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 361 Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and 361 Global Longshort, you can compare the effects of market volatilities on Ford and 361 Global 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 361 Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and 361 Global.
Diversification Opportunities for Ford and 361 Global
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Ford and 361 is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and 361 Global Longshort in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 361 Global Longshort 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 361 Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 361 Global Longshort has no effect on the direction of Ford i.e., Ford and 361 Global go up and down completely randomly.
Pair Corralation between Ford and 361 Global
Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the 361 Global. In addition to that, Ford is 5.19 times more volatile than 361 Global Longshort. It trades about -0.01 of its total potential returns per unit of risk. 361 Global Longshort is currently generating about 0.04 per unit of volatility. If you would invest 1,231 in 361 Global Longshort on September 12, 2024 and sell it today you would earn a total of 27.00 from holding 361 Global Longshort or generate 2.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.2% |
| Values | Daily Returns |
Ford Motor vs. 361 Global Longshort
Performance |
| Timeline |
| Ford Motor |
| 361 Global Longshort |
Ford and 361 Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and 361 Global
The main advantage of trading using opposite Ford and 361 Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, 361 Global 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 361 Global will offset losses from the drop in 361 Global's long position.The idea behind Ford Motor and 361 Global Longshort 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.| 361 Global vs. Diamond Hill Long Short | 361 Global vs. Pimco Rae Worldwide | 361 Global vs. SCOR PK | 361 Global vs. Morningstar Unconstrained Allocation |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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