Correlation Between Ford and Astor Star
Can any of the company-specific risk be diversified away by investing in both Ford and Astor Star 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 Astor Star into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Astor Star Fund, you can compare the effects of market volatilities on Ford and Astor Star 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 Astor Star. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Astor Star.
Diversification Opportunities for Ford and Astor Star
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Ford and Astor is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Astor Star Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Astor Star Fund 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 Astor Star. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Astor Star Fund has no effect on the direction of Ford i.e., Ford and Astor Star go up and down completely randomly.
Pair Corralation between Ford and Astor Star
Taking into account the 90-day investment horizon Ford is expected to generate 1.75 times less return on investment than Astor Star. In addition to that, Ford is 4.34 times more volatile than Astor Star Fund. It trades about 0.02 of its total potential returns per unit of risk. Astor Star Fund is currently generating about 0.16 per unit of volatility. If you would invest 1,380 in Astor Star Fund on August 28, 2024 and sell it today you would earn a total of 262.00 from holding Astor Star Fund or generate 18.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.52% |
| Values | Daily Returns |
Ford Motor vs. Astor Star Fund
Performance |
| Timeline |
| Ford Motor |
| Astor Star Fund |
Ford and Astor Star Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Astor Star
The main advantage of trading using opposite Ford and Astor Star positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Astor Star 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 Astor Star will offset losses from the drop in Astor Star's long position.The idea behind Ford Motor and Astor Star Fund 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.| Astor Star vs. Astor Longshort Fund | Astor Star vs. Astor Longshort Fund | Astor Star vs. Fidelity Balanced Fund | Astor Star vs. Thrivent Moderate Allocation |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
Other Complementary Tools
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Positions Ratings 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 | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets |