Correlation Between Ford and ASTRA INTERNATIONAL
Can any of the company-specific risk be diversified away by investing in both Ford and ASTRA INTERNATIONAL 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 ASTRA INTERNATIONAL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and ASTRA INTERNATIONAL, you can compare the effects of market volatilities on Ford and ASTRA INTERNATIONAL 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 ASTRA INTERNATIONAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and ASTRA INTERNATIONAL.
Diversification Opportunities for Ford and ASTRA INTERNATIONAL
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Ford and ASTRA is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and ASTRA INTERNATIONAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ASTRA INTERNATIONAL 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 ASTRA INTERNATIONAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ASTRA INTERNATIONAL has no effect on the direction of Ford i.e., Ford and ASTRA INTERNATIONAL go up and down completely randomly.
Pair Corralation between Ford and ASTRA INTERNATIONAL
Taking into account the 90-day investment horizon Ford Motor is expected to generate 1.35 times more return on investment than ASTRA INTERNATIONAL. However, Ford is 1.35 times more volatile than ASTRA INTERNATIONAL. It trades about 0.01 of its potential returns per unit of risk. ASTRA INTERNATIONAL is currently generating about -0.01 per unit of risk. If you would invest 1,140 in Ford Motor on September 4, 2024 and sell it today you would lose (42.00) from holding Ford Motor or give up 3.68% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.21% |
| Values | Daily Returns |
Ford Motor vs. ASTRA INTERNATIONAL
Performance |
| Timeline |
| Ford Motor |
| ASTRA INTERNATIONAL |
Ford and ASTRA INTERNATIONAL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and ASTRA INTERNATIONAL
The main advantage of trading using opposite Ford and ASTRA INTERNATIONAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, ASTRA INTERNATIONAL 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 ASTRA INTERNATIONAL will offset losses from the drop in ASTRA INTERNATIONAL's long position.The idea behind Ford Motor and ASTRA INTERNATIONAL 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.| ASTRA INTERNATIONAL vs. TOTAL GABON | ASTRA INTERNATIONAL vs. Walgreens Boots Alliance | ASTRA INTERNATIONAL vs. Peak Resources Limited |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account |