Correlation Between Ford and Aptose Biosciences
Can any of the company-specific risk be diversified away by investing in both Ford and Aptose Biosciences 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 Aptose Biosciences into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Aptose Biosciences, you can compare the effects of market volatilities on Ford and Aptose Biosciences 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 Aptose Biosciences. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Aptose Biosciences.
Diversification Opportunities for Ford and Aptose Biosciences
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Ford and Aptose is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Aptose Biosciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aptose Biosciences 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 Aptose Biosciences. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aptose Biosciences has no effect on the direction of Ford i.e., Ford and Aptose Biosciences go up and down completely randomly.
Pair Corralation between Ford and Aptose Biosciences
Taking into account the 90-day investment horizon Ford Motor is expected to generate 0.34 times more return on investment than Aptose Biosciences. However, Ford Motor is 2.92 times less risky than Aptose Biosciences. It trades about 0.04 of its potential returns per unit of risk. Aptose Biosciences is currently generating about -0.38 per unit of risk. If you would invest 1,122 in Ford Motor on August 28, 2024 and sell it today you would earn a total of 18.00 from holding Ford Motor or generate 1.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ford Motor vs. Aptose Biosciences
Performance |
| Timeline |
| Ford Motor |
| Aptose Biosciences |
Ford and Aptose Biosciences Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Aptose Biosciences
The main advantage of trading using opposite Ford and Aptose Biosciences positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Aptose Biosciences 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 Aptose Biosciences will offset losses from the drop in Aptose Biosciences' long position.The idea behind Ford Motor and Aptose Biosciences 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.| Aptose Biosciences vs. CytomX Therapeutics | Aptose Biosciences vs. Instil Bio | Aptose Biosciences vs. Spero Therapeutics | Aptose Biosciences vs. Assembly Biosciences |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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