Correlation Between Ford and AT S
Can any of the company-specific risk be diversified away by investing in both Ford and AT S 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 AT S into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and AT S Austria, you can compare the effects of market volatilities on Ford and AT S 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 AT S. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and AT S.
Diversification Opportunities for Ford and AT S
Very good diversification
The 3 months correlation between Ford and AUS is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and AT S Austria in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AT S Austria 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 AT S. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AT S Austria has no effect on the direction of Ford i.e., Ford and AT S go up and down completely randomly.
Pair Corralation between Ford and AT S
Taking into account the 90-day investment horizon Ford Motor is expected to generate 0.81 times more return on investment than AT S. However, Ford Motor is 1.23 times less risky than AT S. It trades about 0.01 of its potential returns per unit of risk. AT S Austria is currently generating about -0.05 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 | Very Weak |
| Accuracy | 98.02% |
| Values | Daily Returns |
Ford Motor vs. AT S Austria
Performance |
| Timeline |
| Ford Motor |
| AT S Austria |
Ford and AT S Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and AT S
The main advantage of trading using opposite Ford and AT S positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, AT S 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 AT S will offset losses from the drop in AT S's long position.The idea behind Ford Motor and AT S Austria 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.| AT S vs. Uber Technologies | AT S vs. HK Electric Investments | AT S vs. Axcelis Technologies | AT S vs. Chuangs China Investments |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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