Correlation Between Ford and Blue Dolphin
Can any of the company-specific risk be diversified away by investing in both Ford and Blue Dolphin 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 Blue Dolphin into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Blue Dolphin Energy, you can compare the effects of market volatilities on Ford and Blue Dolphin 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 Blue Dolphin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Blue Dolphin.
Diversification Opportunities for Ford and Blue Dolphin
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Ford and Blue is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Blue Dolphin Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blue Dolphin Energy 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 Blue Dolphin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blue Dolphin Energy has no effect on the direction of Ford i.e., Ford and Blue Dolphin go up and down completely randomly.
Pair Corralation between Ford and Blue Dolphin
If you would invest 1,008 in Ford Motor on September 2, 2024 and sell it today you would earn a total of 105.00 from holding Ford Motor or generate 10.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 4.76% |
| Values | Daily Returns |
Ford Motor vs. Blue Dolphin Energy
Performance |
| Timeline |
| Ford Motor |
| Blue Dolphin Energy |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Ford and Blue Dolphin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Blue Dolphin
The main advantage of trading using opposite Ford and Blue Dolphin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Blue Dolphin 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 Blue Dolphin will offset losses from the drop in Blue Dolphin's long position.The idea behind Ford Motor and Blue Dolphin Energy 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.| Blue Dolphin vs. Aemetis | Blue Dolphin vs. PBF Energy | Blue Dolphin vs. Clean Energy Fuels | Blue Dolphin vs. Par Pacific Holdings |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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