Correlation Between Ford and BIO UV
Can any of the company-specific risk be diversified away by investing in both Ford and BIO UV 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 BIO UV into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and BIO UV Group, you can compare the effects of market volatilities on Ford and BIO UV 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 BIO UV. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and BIO UV.
Diversification Opportunities for Ford and BIO UV
Excellent diversification
The 3 months correlation between Ford and BIO is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and BIO UV Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BIO UV 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 BIO UV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BIO UV Group has no effect on the direction of Ford i.e., Ford and BIO UV go up and down completely randomly.
Pair Corralation between Ford and BIO UV
Taking into account the 90-day investment horizon Ford Motor is expected to generate 1.11 times more return on investment than BIO UV. However, Ford is 1.11 times more volatile than BIO UV Group. It trades about -0.01 of its potential returns per unit of risk. BIO UV Group is currently generating about -0.06 per unit of risk. If you would invest 1,200 in Ford Motor on September 3, 2024 and sell it today you would lose (87.00) from holding Ford Motor or give up 7.25% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 96.69% |
| Values | Daily Returns |
Ford Motor vs. BIO UV Group
Performance |
| Timeline |
| Ford Motor |
| BIO UV Group |
Ford and BIO UV Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and BIO UV
The main advantage of trading using opposite Ford and BIO UV positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, BIO UV 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 BIO UV will offset losses from the drop in BIO UV's long position.| Ford vs. GreenPower Motor | Ford vs. ZEEKR Intelligent Technology | Ford vs. Volcon Inc | Ford vs. Ford Motor |
| BIO UV vs. Veolia Environnement VE | BIO UV vs. Derichebourg | BIO UV vs. Seche Environnem | BIO UV vs. Groupe Pizzorno Environnement |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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