Correlation Between Ford and Methanor
Can any of the company-specific risk be diversified away by investing in both Ford and Methanor 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 Methanor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Methanor, you can compare the effects of market volatilities on Ford and Methanor 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 Methanor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Methanor.
Diversification Opportunities for Ford and Methanor
Good diversification
The 3 months correlation between Ford and Methanor is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Methanor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Methanor 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 Methanor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Methanor has no effect on the direction of Ford i.e., Ford and Methanor go up and down completely randomly.
Pair Corralation between Ford and Methanor
Taking into account the 90-day investment horizon Ford Motor is expected to generate 1.36 times more return on investment than Methanor. However, Ford is 1.36 times more volatile than Methanor. It trades about 0.04 of its potential returns per unit of risk. Methanor is currently generating about -0.44 per unit of risk. If you would invest 1,122 in Ford Motor on August 28, 2024 and sell it today you would earn a total of 18.00 from holding Ford Motor or generate 1.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ford Motor vs. Methanor
Performance |
| Timeline |
| Ford Motor |
| Methanor |
Ford and Methanor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Methanor
The main advantage of trading using opposite Ford and Methanor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Methanor 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 Methanor will offset losses from the drop in Methanor's long position.The idea behind Ford Motor and Methanor 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.| Methanor vs. Voltalia SA | Methanor vs. Ecoslops SA | Methanor vs. Agripower France Sa | Methanor vs. Glob Bioenergi |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
Other Complementary Tools
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| 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 | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets |