Correlation Between Ford and Baloise Holding
Can any of the company-specific risk be diversified away by investing in both Ford and Baloise Holding 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 Baloise Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Baloise Holding AG, you can compare the effects of market volatilities on Ford and Baloise Holding 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 Baloise Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Baloise Holding.
Diversification Opportunities for Ford and Baloise Holding
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Ford and Baloise is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Baloise Holding AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baloise Holding AG 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 Baloise Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baloise Holding AG has no effect on the direction of Ford i.e., Ford and Baloise Holding go up and down completely randomly.
Pair Corralation between Ford and Baloise Holding
Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the Baloise Holding. In addition to that, Ford is 2.28 times more volatile than Baloise Holding AG. It trades about 0.0 of its total potential returns per unit of risk. Baloise Holding AG is currently generating about 0.07 per unit of volatility. If you would invest 13,355 in Baloise Holding AG on August 31, 2024 and sell it today you would earn a total of 3,385 from holding Baloise Holding AG or generate 25.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.47% |
| Values | Daily Returns |
Ford Motor vs. Baloise Holding AG
Performance |
| Timeline |
| Ford Motor |
| Baloise Holding AG |
Ford and Baloise Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Baloise Holding
The main advantage of trading using opposite Ford and Baloise Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Baloise Holding 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 Baloise Holding will offset losses from the drop in Baloise Holding's long position.The idea behind Ford Motor and Baloise Holding AG 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.| Baloise Holding vs. Swiss Life Holding | Baloise Holding vs. Helvetia Holding AG | Baloise Holding vs. Swisscom AG | Baloise Holding vs. Zurich Insurance Group |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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