Correlation Between Ford and Original Bark
Can any of the company-specific risk be diversified away by investing in both Ford and Original Bark 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 Original Bark into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Original Bark Co, you can compare the effects of market volatilities on Ford and Original Bark 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 Original Bark. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Original Bark.
Diversification Opportunities for Ford and Original Bark
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Ford and Original is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Original Bark Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Original Bark 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 Original Bark. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Original Bark has no effect on the direction of Ford i.e., Ford and Original Bark go up and down completely randomly.
Pair Corralation between Ford and Original Bark
Taking into account the 90-day investment horizon Ford is expected to generate 5.49 times less return on investment than Original Bark. But when comparing it to its historical volatility, Ford Motor is 2.07 times less risky than Original Bark. It trades about 0.17 of its potential returns per unit of risk. Original Bark Co is currently generating about 0.46 of returns per unit of risk over similar time horizon. If you would invest 142.00 in Original Bark Co on August 31, 2024 and sell it today you would earn a total of 73.00 from holding Original Bark Co or generate 51.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Ford Motor vs. Original Bark Co
Performance |
| Timeline |
| Ford Motor |
| Original Bark |
Ford and Original Bark Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Original Bark
The main advantage of trading using opposite Ford and Original Bark positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Original Bark 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 Original Bark will offset losses from the drop in Original Bark's long position.The idea behind Ford Motor and Original Bark Co 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.| Original Bark vs. Target | Original Bark vs. Lowes Companies | Original Bark vs. Kohls Corp | Original Bark vs. Walmart |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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