Correlation Between Ford and Alandsbanken Abp
Can any of the company-specific risk be diversified away by investing in both Ford and Alandsbanken Abp 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 Alandsbanken Abp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Alandsbanken Abp A, you can compare the effects of market volatilities on Ford and Alandsbanken Abp 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 Alandsbanken Abp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Alandsbanken Abp.
Diversification Opportunities for Ford and Alandsbanken Abp
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Ford and Alandsbanken is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Alandsbanken Abp A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alandsbanken Abp A 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 Alandsbanken Abp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alandsbanken Abp A has no effect on the direction of Ford i.e., Ford and Alandsbanken Abp go up and down completely randomly.
Pair Corralation between Ford and Alandsbanken Abp
Taking into account the 90-day investment horizon Ford Motor is expected to generate 1.41 times more return on investment than Alandsbanken Abp. However, Ford is 1.41 times more volatile than Alandsbanken Abp A. It trades about 0.01 of its potential returns per unit of risk. Alandsbanken Abp A is currently generating about 0.01 per unit of risk. If you would invest 1,132 in Ford Motor on August 24, 2024 and sell it today you would lose (52.00) from holding Ford Motor or give up 4.59% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Ford Motor vs. Alandsbanken Abp A
Performance |
| Timeline |
| Ford Motor |
| Alandsbanken Abp A |
Ford and Alandsbanken Abp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Alandsbanken Abp
The main advantage of trading using opposite Ford and Alandsbanken Abp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Alandsbanken Abp 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 Alandsbanken Abp will offset losses from the drop in Alandsbanken Abp's long position.The idea behind Ford Motor and Alandsbanken Abp A 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.| Alandsbanken Abp vs. Aktia Bank Abp | Alandsbanken Abp vs. Alandsbanken Abp B | Alandsbanken Abp vs. CapMan Oyj B | Alandsbanken Abp vs. Tokmanni Group Oyj |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
Other Complementary Tools
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio |