Correlation Between Ford and Ascendis Pharma
Can any of the company-specific risk be diversified away by investing in both Ford and Ascendis Pharma 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 Ascendis Pharma into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Ascendis Pharma AS, you can compare the effects of market volatilities on Ford and Ascendis Pharma 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 Ascendis Pharma. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Ascendis Pharma.
Diversification Opportunities for Ford and Ascendis Pharma
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Ford and Ascendis is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Ascendis Pharma AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ascendis Pharma AS 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 Ascendis Pharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ascendis Pharma AS has no effect on the direction of Ford i.e., Ford and Ascendis Pharma go up and down completely randomly.
Pair Corralation between Ford and Ascendis Pharma
Taking into account the 90-day investment horizon Ford is expected to generate 8.39 times less return on investment than Ascendis Pharma. But when comparing it to its historical volatility, Ford Motor is 1.25 times less risky than Ascendis Pharma. It trades about 0.01 of its potential returns per unit of risk. Ascendis Pharma AS is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 7,283 in Ascendis Pharma AS on August 24, 2024 and sell it today you would earn a total of 5,698 from holding Ascendis Pharma AS or generate 78.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ford Motor vs. Ascendis Pharma AS
Performance |
| Timeline |
| Ford Motor |
| Ascendis Pharma AS |
Ford and Ascendis Pharma Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Ascendis Pharma
The main advantage of trading using opposite Ford and Ascendis Pharma positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Ascendis Pharma 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 Ascendis Pharma will offset losses from the drop in Ascendis Pharma's long position.The idea behind Ford Motor and Ascendis Pharma AS 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.| Ascendis Pharma vs. Lyra Therapeutics | Ascendis Pharma vs. Hookipa Pharma | Ascendis Pharma vs. Cingulate Warrants | Ascendis Pharma vs. SAB Biotherapeutics |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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