Correlation Between Ford and Associated Alcohols
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By analyzing existing cross correlation between Ford Motor and Associated Alcohols Breweries, you can compare the effects of market volatilities on Ford and Associated Alcohols 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 Associated Alcohols. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Associated Alcohols.
Diversification Opportunities for Ford and Associated Alcohols
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ford and Associated is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Associated Alcohols Breweries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Associated Alcohols 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 Associated Alcohols. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Associated Alcohols has no effect on the direction of Ford i.e., Ford and Associated Alcohols go up and down completely randomly.
Pair Corralation between Ford and Associated Alcohols
Taking into account the 90-day investment horizon Ford is expected to generate 2.0 times less return on investment than Associated Alcohols. In addition to that, Ford is 1.48 times more volatile than Associated Alcohols Breweries. It trades about 0.04 of its total potential returns per unit of risk. Associated Alcohols Breweries is currently generating about 0.12 per unit of volatility. If you would invest 89,200 in Associated Alcohols Breweries on August 28, 2024 and sell it today you would earn a total of 3,795 from holding Associated Alcohols Breweries or generate 4.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Ford Motor vs. Associated Alcohols Breweries
Performance |
| Timeline |
| Ford Motor |
| Associated Alcohols |
Ford and Associated Alcohols Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Associated Alcohols
The main advantage of trading using opposite Ford and Associated Alcohols positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Associated Alcohols 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 Associated Alcohols will offset losses from the drop in Associated Alcohols' long position.The idea behind Ford Motor and Associated Alcohols Breweries 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.| Associated Alcohols vs. The Orissa Minerals | Associated Alcohols vs. DSJ Keep Learning | Associated Alcohols vs. Kingfa Science Technology | Associated Alcohols vs. Rico Auto Industries |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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