Correlation Between Ford and Augwind Energy
Can any of the company-specific risk be diversified away by investing in both Ford and Augwind Energy 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 Augwind Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Augwind Energy Tech, you can compare the effects of market volatilities on Ford and Augwind Energy 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 Augwind Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Augwind Energy.
Diversification Opportunities for Ford and Augwind Energy
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Ford and Augwind is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Augwind Energy Tech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Augwind Energy 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 Augwind Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Augwind Energy Tech has no effect on the direction of Ford i.e., Ford and Augwind Energy go up and down completely randomly.
Pair Corralation between Ford and Augwind Energy
Taking into account the 90-day investment horizon Ford is expected to generate 3.63 times less return on investment than Augwind Energy. But when comparing it to its historical volatility, Ford Motor is 3.31 times less risky than Augwind Energy. It trades about 0.23 of its potential returns per unit of risk. Augwind Energy Tech is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 49,000 in Augwind Energy Tech on September 1, 2024 and sell it today you would earn a total of 14,610 from holding Augwind Energy Tech or generate 29.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 85.71% |
| Values | Daily Returns |
Ford Motor vs. Augwind Energy Tech
Performance |
| Timeline |
| Ford Motor |
| Augwind Energy Tech |
Ford and Augwind Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Augwind Energy
The main advantage of trading using opposite Ford and Augwind Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Augwind Energy 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 Augwind Energy will offset losses from the drop in Augwind Energy's long position.The idea behind Ford Motor and Augwind Energy Tech 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.| Augwind Energy vs. Hiron Trade Investments Industrial | Augwind Energy vs. Retailors | Augwind Energy vs. Mobile Max M | Augwind Energy vs. Rimon Consulting Management |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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