Correlation Between Ford and Amadeus IT
Can any of the company-specific risk be diversified away by investing in both Ford and Amadeus IT 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 Amadeus IT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Amadeus IT Group, you can compare the effects of market volatilities on Ford and Amadeus IT 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 Amadeus IT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Amadeus IT.
Diversification Opportunities for Ford and Amadeus IT
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Ford and Amadeus is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Amadeus IT Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amadeus IT Group 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 Amadeus IT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amadeus IT Group has no effect on the direction of Ford i.e., Ford and Amadeus IT go up and down completely randomly.
Pair Corralation between Ford and Amadeus IT
Taking into account the 90-day investment horizon Ford Motor is expected to generate 1.75 times more return on investment than Amadeus IT. However, Ford is 1.75 times more volatile than Amadeus IT Group. It trades about 0.17 of its potential returns per unit of risk. Amadeus IT Group is currently generating about -0.08 per unit of risk. If you would invest 1,033 in Ford Motor on August 31, 2024 and sell it today you would earn a total of 77.00 from holding Ford Motor or generate 7.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ford Motor vs. Amadeus IT Group
Performance |
| Timeline |
| Ford Motor |
| Amadeus IT Group |
Ford and Amadeus IT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Amadeus IT
The main advantage of trading using opposite Ford and Amadeus IT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Amadeus IT 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 Amadeus IT will offset losses from the drop in Amadeus IT's long position.The idea behind Ford Motor and Amadeus IT Group 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.| Amadeus IT vs. Apollo Investment Corp | Amadeus IT vs. REGAL ASIAN INVESTMENTS | Amadeus IT vs. CapitaLand Investment Limited | Amadeus IT vs. MAGIC SOFTWARE ENTR |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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