Correlation Between Ford and One Choice
Can any of the company-specific risk be diversified away by investing in both Ford and One Choice 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 One Choice into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and One Choice 2035, you can compare the effects of market volatilities on Ford and One Choice 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 One Choice. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and One Choice.
Diversification Opportunities for Ford and One Choice
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Ford and One is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and One Choice 2035 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on One Choice 2035 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 One Choice. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of One Choice 2035 has no effect on the direction of Ford i.e., Ford and One Choice go up and down completely randomly.
Pair Corralation between Ford and One Choice
Taking into account the 90-day investment horizon Ford is expected to generate 1.06 times less return on investment than One Choice. In addition to that, Ford is 5.25 times more volatile than One Choice 2035. It trades about 0.02 of its total potential returns per unit of risk. One Choice 2035 is currently generating about 0.12 per unit of volatility. If you would invest 955.00 in One Choice 2035 on September 4, 2024 and sell it today you would earn a total of 136.00 from holding One Choice 2035 or generate 14.24% 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. One Choice 2035
Performance |
| Timeline |
| Ford Motor |
| One Choice 2035 |
Ford and One Choice Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and One Choice
The main advantage of trading using opposite Ford and One Choice positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, One Choice 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 One Choice will offset losses from the drop in One Choice's long position.The idea behind Ford Motor and One Choice 2035 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.| One Choice vs. Vanguard Target Retirement | One Choice vs. American Funds 2035 | One Choice vs. American Funds 2035 | One Choice vs. American Funds 2035 |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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