Correlation Between Ford and ANKR
Can any of the company-specific risk be diversified away by investing in both Ford and ANKR 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 ANKR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and ANKR, you can compare the effects of market volatilities on Ford and ANKR 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 ANKR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and ANKR.
Diversification Opportunities for Ford and ANKR
Weak diversification
The 3 months correlation between Ford and ANKR is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and ANKR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ANKR 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 ANKR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ANKR has no effect on the direction of Ford i.e., Ford and ANKR go up and down completely randomly.
Pair Corralation between Ford and ANKR
Taking into account the 90-day investment horizon Ford is expected to generate 112.86 times less return on investment than ANKR. But when comparing it to its historical volatility, Ford Motor is 2.29 times less risky than ANKR. It trades about 0.01 of its potential returns per unit of risk. ANKR is currently generating about 0.34 of returns per unit of risk over similar time horizon. If you would invest 2.61 in ANKR on August 27, 2024 and sell it today you would earn a total of 1.32 from holding ANKR or generate 50.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ford Motor vs. ANKR
Performance |
| Timeline |
| Ford Motor |
| ANKR |
Ford and ANKR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and ANKR
The main advantage of trading using opposite Ford and ANKR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, ANKR 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 ANKR will offset losses from the drop in ANKR's long position.The idea behind Ford Motor and ANKR 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.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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
Other Complementary Tools
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account |