Correlation Between Ford and AUST AGRICULTURAL
Can any of the company-specific risk be diversified away by investing in both Ford and AUST AGRICULTURAL 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 AUST AGRICULTURAL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and AUST AGRICULTURAL, you can compare the effects of market volatilities on Ford and AUST AGRICULTURAL 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 AUST AGRICULTURAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and AUST AGRICULTURAL.
Diversification Opportunities for Ford and AUST AGRICULTURAL
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Ford and AUST is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and AUST AGRICULTURAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AUST AGRICULTURAL 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 AUST AGRICULTURAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AUST AGRICULTURAL has no effect on the direction of Ford i.e., Ford and AUST AGRICULTURAL go up and down completely randomly.
Pair Corralation between Ford and AUST AGRICULTURAL
Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the AUST AGRICULTURAL. In addition to that, Ford is 1.8 times more volatile than AUST AGRICULTURAL. It trades about -0.31 of its total potential returns per unit of risk. AUST AGRICULTURAL is currently generating about -0.05 per unit of volatility. If you would invest 82.00 in AUST AGRICULTURAL on September 19, 2024 and sell it today you would lose (1.00) from holding AUST AGRICULTURAL or give up 1.22% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Ford Motor vs. AUST AGRICULTURAL
Performance |
| Timeline |
| Ford Motor |
| AUST AGRICULTURAL |
Ford and AUST AGRICULTURAL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and AUST AGRICULTURAL
The main advantage of trading using opposite Ford and AUST AGRICULTURAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, AUST AGRICULTURAL 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 AUST AGRICULTURAL will offset losses from the drop in AUST AGRICULTURAL's long position.The idea behind Ford Motor and AUST AGRICULTURAL 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.| AUST AGRICULTURAL vs. PROSIEBENSAT1 MEDIADR4 | AUST AGRICULTURAL vs. Playtech plc | AUST AGRICULTURAL vs. LG Display Co | AUST AGRICULTURAL vs. Tencent Music Entertainment |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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