Correlation Between Ford and Betashares Asia
Can any of the company-specific risk be diversified away by investing in both Ford and Betashares Asia 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 Betashares Asia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Betashares Asia Technology, you can compare the effects of market volatilities on Ford and Betashares Asia 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 Betashares Asia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Betashares Asia.
Diversification Opportunities for Ford and Betashares Asia
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Ford and Betashares is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Betashares Asia Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Betashares Asia Tech 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 Betashares Asia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Betashares Asia Tech has no effect on the direction of Ford i.e., Ford and Betashares Asia go up and down completely randomly.
Pair Corralation between Ford and Betashares Asia
Taking into account the 90-day investment horizon Ford is expected to generate 2.33 times less return on investment than Betashares Asia. In addition to that, Ford is 1.84 times more volatile than Betashares Asia Technology. It trades about 0.02 of its total potential returns per unit of risk. Betashares Asia Technology is currently generating about 0.08 per unit of volatility. If you would invest 673.00 in Betashares Asia Technology on August 26, 2024 and sell it today you would earn a total of 289.00 from holding Betashares Asia Technology or generate 42.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 98.75% |
| Values | Daily Returns |
Ford Motor vs. Betashares Asia Technology
Performance |
| Timeline |
| Ford Motor |
| Betashares Asia Tech |
Ford and Betashares Asia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Betashares Asia
The main advantage of trading using opposite Ford and Betashares Asia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Betashares Asia 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 Betashares Asia will offset losses from the drop in Betashares Asia's long position.The idea behind Ford Motor and Betashares Asia Technology 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.| Betashares Asia vs. BetaShares Global Government | Betashares Asia vs. BetaShares Geared Australian | Betashares Asia vs. Global X Semiconductor | Betashares Asia vs. iShares UBS Government |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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