Correlation Between Ford and Appleseed Fund
Can any of the company-specific risk be diversified away by investing in both Ford and Appleseed Fund 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 Appleseed Fund into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Appleseed Fund Appleseed, you can compare the effects of market volatilities on Ford and Appleseed Fund 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 Appleseed Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Appleseed Fund.
Diversification Opportunities for Ford and Appleseed Fund
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ford and Appleseed is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Appleseed Fund Appleseed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Appleseed Fund Appleseed 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 Appleseed Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Appleseed Fund Appleseed has no effect on the direction of Ford i.e., Ford and Appleseed Fund go up and down completely randomly.
Pair Corralation between Ford and Appleseed Fund
Taking into account the 90-day investment horizon Ford is expected to generate 1.09 times less return on investment than Appleseed Fund. In addition to that, Ford is 2.99 times more volatile than Appleseed Fund Appleseed. It trades about 0.03 of its total potential returns per unit of risk. Appleseed Fund Appleseed is currently generating about 0.08 per unit of volatility. If you would invest 1,335 in Appleseed Fund Appleseed on September 3, 2024 and sell it today you would earn a total of 221.00 from holding Appleseed Fund Appleseed or generate 16.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ford Motor vs. Appleseed Fund Appleseed
Performance |
| Timeline |
| Ford Motor |
| Appleseed Fund Appleseed |
Ford and Appleseed Fund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Appleseed Fund
The main advantage of trading using opposite Ford and Appleseed Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Appleseed Fund 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 Appleseed Fund will offset losses from the drop in Appleseed Fund's long position.| Ford vs. GreenPower Motor | Ford vs. ZEEKR Intelligent Technology | Ford vs. Volcon Inc | Ford vs. Ford Motor |
| Appleseed Fund vs. T Rowe Price | Appleseed Fund vs. Inflation Protected Bond Fund | Appleseed Fund vs. Tiaa Cref Inflation Linked Bond | Appleseed Fund vs. Lord Abbett Inflation |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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