Correlation Between Ford and Applied Molecular
Can any of the company-specific risk be diversified away by investing in both Ford and Applied Molecular 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 Applied Molecular into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Applied Molecular Transport, you can compare the effects of market volatilities on Ford and Applied Molecular 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 Applied Molecular. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Applied Molecular.
Diversification Opportunities for Ford and Applied Molecular
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Ford and Applied is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Applied Molecular Transport in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Applied Molecular 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 Applied Molecular. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Applied Molecular has no effect on the direction of Ford i.e., Ford and Applied Molecular go up and down completely randomly.
Pair Corralation between Ford and Applied Molecular
If you would invest 1,096 in Ford Motor on August 29, 2024 and sell it today you would earn a total of 14.00 from holding Ford Motor or generate 1.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 1.56% |
| Values | Daily Returns |
Ford Motor vs. Applied Molecular Transport
Performance |
| Timeline |
| Ford Motor |
| Applied Molecular |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Ford and Applied Molecular Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Applied Molecular
The main advantage of trading using opposite Ford and Applied Molecular positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Applied Molecular 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 Applied Molecular will offset losses from the drop in Applied Molecular's long position.The idea behind Ford Motor and Applied Molecular Transport 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.| Applied Molecular vs. Aileron Therapeutics | Applied Molecular vs. Bio Path Holdings | Applied Molecular vs. Benitec Biopharma Ltd | Applied Molecular vs. Aerovate Therapeutics |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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