Correlation Between Ford and BANKINTER ADR
Can any of the company-specific risk be diversified away by investing in both Ford and BANKINTER ADR 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 BANKINTER ADR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and BANKINTER ADR 2007, you can compare the effects of market volatilities on Ford and BANKINTER ADR 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 BANKINTER ADR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and BANKINTER ADR.
Diversification Opportunities for Ford and BANKINTER ADR
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Ford and BANKINTER is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and BANKINTER ADR 2007 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BANKINTER ADR 2007 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 BANKINTER ADR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BANKINTER ADR 2007 has no effect on the direction of Ford i.e., Ford and BANKINTER ADR go up and down completely randomly.
Pair Corralation between Ford and BANKINTER ADR
Taking into account the 90-day investment horizon Ford is expected to generate 1.24 times less return on investment than BANKINTER ADR. In addition to that, Ford is 1.39 times more volatile than BANKINTER ADR 2007. It trades about 0.05 of its total potential returns per unit of risk. BANKINTER ADR 2007 is currently generating about 0.09 per unit of volatility. If you would invest 705.00 in BANKINTER ADR 2007 on August 26, 2024 and sell it today you would earn a total of 25.00 from holding BANKINTER ADR 2007 or generate 3.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ford Motor vs. BANKINTER ADR 2007
Performance |
| Timeline |
| Ford Motor |
| BANKINTER ADR 2007 |
Ford and BANKINTER ADR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and BANKINTER ADR
The main advantage of trading using opposite Ford and BANKINTER ADR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, BANKINTER ADR 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 BANKINTER ADR will offset losses from the drop in BANKINTER ADR's long position.The idea behind Ford Motor and BANKINTER ADR 2007 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.| BANKINTER ADR vs. Apple Inc | BANKINTER ADR vs. Apple Inc | BANKINTER ADR vs. Apple Inc | BANKINTER ADR vs. Apple Inc |
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.
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