Correlation Between Ford and Avensia Publ
Can any of the company-specific risk be diversified away by investing in both Ford and Avensia Publ 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 Avensia Publ into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Avensia publ AB, you can compare the effects of market volatilities on Ford and Avensia Publ 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 Avensia Publ. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Avensia Publ.
Diversification Opportunities for Ford and Avensia Publ
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ford and Avensia is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Avensia publ AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avensia publ AB 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 Avensia Publ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avensia publ AB has no effect on the direction of Ford i.e., Ford and Avensia Publ go up and down completely randomly.
Pair Corralation between Ford and Avensia Publ
Taking into account the 90-day investment horizon Ford Motor is expected to generate 1.04 times more return on investment than Avensia Publ. However, Ford is 1.04 times more volatile than Avensia publ AB. It trades about 0.05 of its potential returns per unit of risk. Avensia publ AB is currently generating about -0.14 per unit of risk. If you would invest 1,089 in Ford Motor on August 28, 2024 and sell it today you would earn a total of 51.00 from holding Ford Motor or generate 4.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.46% |
| Values | Daily Returns |
Ford Motor vs. Avensia publ AB
Performance |
| Timeline |
| Ford Motor |
| Avensia publ AB |
Ford and Avensia Publ Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Avensia Publ
The main advantage of trading using opposite Ford and Avensia Publ positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Avensia Publ 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 Avensia Publ will offset losses from the drop in Avensia Publ's long position.The idea behind Ford Motor and Avensia publ AB 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.| Avensia Publ vs. Svedbergs i Dalstorp | Avensia Publ vs. Know IT AB | Avensia Publ vs. FormPipe Software AB |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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