Correlation Between Ford and Bergman Beving
Can any of the company-specific risk be diversified away by investing in both Ford and Bergman Beving 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 Bergman Beving into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Bergman Beving AB, you can compare the effects of market volatilities on Ford and Bergman Beving 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 Bergman Beving. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Bergman Beving.
Diversification Opportunities for Ford and Bergman Beving
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Ford and Bergman is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Bergman Beving AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bergman Beving AB 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 Bergman Beving. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bergman Beving AB has no effect on the direction of Ford i.e., Ford and Bergman Beving go up and down completely randomly.
Pair Corralation between Ford and Bergman Beving
Taking into account the 90-day investment horizon Ford Motor is expected to generate 1.73 times more return on investment than Bergman Beving. However, Ford is 1.73 times more volatile than Bergman Beving AB. It trades about 0.05 of its potential returns per unit of risk. Bergman Beving AB is currently generating about -0.35 per unit of risk. If you would invest 1,092 in Ford Motor on August 26, 2024 and sell it today you would earn a total of 26.00 from holding Ford Motor or generate 2.38% 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. Bergman Beving AB
Performance |
| Timeline |
| Ford Motor |
| Bergman Beving AB |
Ford and Bergman Beving Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Bergman Beving
The main advantage of trading using opposite Ford and Bergman Beving positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Bergman Beving 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 Bergman Beving will offset losses from the drop in Bergman Beving's long position.The idea behind Ford Motor and Bergman Beving AB 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.| Bergman Beving vs. Lagercrantz Group AB | Bergman Beving vs. Addtech AB | Bergman Beving vs. AddLife AB | Bergman Beving vs. Bufab Holding AB |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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