Correlation Between Ford and BAWAG Group
Can any of the company-specific risk be diversified away by investing in both Ford and BAWAG Group 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 BAWAG Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and BAWAG Group AG, you can compare the effects of market volatilities on Ford and BAWAG Group 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 BAWAG Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and BAWAG Group.
Diversification Opportunities for Ford and BAWAG Group
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Ford and BAWAG is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and BAWAG Group AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BAWAG Group 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 BAWAG Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BAWAG Group AG has no effect on the direction of Ford i.e., Ford and BAWAG Group go up and down completely randomly.
Pair Corralation between Ford and BAWAG Group
Taking into account the 90-day investment horizon Ford is expected to generate 3.67 times less return on investment than BAWAG Group. In addition to that, Ford is 1.15 times more volatile than BAWAG Group AG. It trades about 0.07 of its total potential returns per unit of risk. BAWAG Group AG is currently generating about 0.29 per unit of volatility. If you would invest 8,010 in BAWAG Group AG on November 4, 2024 and sell it today you would earn a total of 745.00 from holding BAWAG Group AG or generate 9.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 90.91% |
| Values | Daily Returns |
Ford Motor vs. BAWAG Group AG
Performance |
| Timeline |
| Ford Motor |
| BAWAG Group AG |
Ford and BAWAG Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and BAWAG Group
The main advantage of trading using opposite Ford and BAWAG Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, BAWAG Group 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 BAWAG Group will offset losses from the drop in BAWAG Group's long position.The idea behind Ford Motor and BAWAG Group 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.| BAWAG Group vs. Erste Group Bank | BAWAG Group vs. Raiffeisen Bank International | BAWAG Group vs. UNIQA Insurance Group | BAWAG Group vs. OMV Aktiengesellschaft |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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