Correlation Between Ford and Amoeba SA
Can any of the company-specific risk be diversified away by investing in both Ford and Amoeba SA 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 Amoeba SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Amoeba SA, you can compare the effects of market volatilities on Ford and Amoeba SA 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 Amoeba SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Amoeba SA.
Diversification Opportunities for Ford and Amoeba SA
Very weak diversification
The 3 months correlation between Ford and Amoeba is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Amoeba SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amoeba SA 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 Amoeba SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amoeba SA has no effect on the direction of Ford i.e., Ford and Amoeba SA go up and down completely randomly.
Pair Corralation between Ford and Amoeba SA
Taking into account the 90-day investment horizon Ford is expected to generate 6.6 times less return on investment than Amoeba SA. But when comparing it to its historical volatility, Ford Motor is 2.05 times less risky than Amoeba SA. It trades about 0.02 of its potential returns per unit of risk. Amoeba SA is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 41.00 in Amoeba SA on September 4, 2024 and sell it today you would earn a total of 33.00 from holding Amoeba SA or generate 80.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 98.4% |
| Values | Daily Returns |
Ford Motor vs. Amoeba SA
Performance |
| Timeline |
| Ford Motor |
| Amoeba SA |
Ford and Amoeba SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Amoeba SA
The main advantage of trading using opposite Ford and Amoeba SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Amoeba SA 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 Amoeba SA will offset losses from the drop in Amoeba SA's long position.The idea behind Ford Motor and Amoeba SA 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.| Amoeba SA vs. Gaussin | Amoeba SA vs. Blockchain Group SA | Amoeba SA vs. Drone Volt SA | Amoeba SA vs. Gensight Biologics SA |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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