Correlation Between Ford and BankInvest Optima
Can any of the company-specific risk be diversified away by investing in both Ford and BankInvest Optima 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 BankInvest Optima into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and BankInvest Optima 30, you can compare the effects of market volatilities on Ford and BankInvest Optima 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 BankInvest Optima. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and BankInvest Optima.
Diversification Opportunities for Ford and BankInvest Optima
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ford and BankInvest is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and BankInvest Optima 30 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BankInvest Optima 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 BankInvest Optima. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BankInvest Optima has no effect on the direction of Ford i.e., Ford and BankInvest Optima go up and down completely randomly.
Pair Corralation between Ford and BankInvest Optima
Taking into account the 90-day investment horizon Ford Motor is expected to generate 6.36 times more return on investment than BankInvest Optima. However, Ford is 6.36 times more volatile than BankInvest Optima 30. It trades about 0.08 of its potential returns per unit of risk. BankInvest Optima 30 is currently generating about 0.09 per unit of risk. If you would invest 976.00 in Ford Motor on November 8, 2024 and sell it today you would earn a total of 25.00 from holding Ford Motor or generate 2.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 90.91% |
| Values | Daily Returns |
Ford Motor vs. BankInvest Optima 30
Performance |
| Timeline |
| Ford Motor |
| BankInvest Optima |
Ford and BankInvest Optima Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and BankInvest Optima
The main advantage of trading using opposite Ford and BankInvest Optima positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, BankInvest Optima 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 BankInvest Optima will offset losses from the drop in BankInvest Optima's long position.The idea behind Ford Motor and BankInvest Optima 30 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.| BankInvest Optima vs. Novo Nordisk AS | BankInvest Optima vs. Nordea Bank Abp | BankInvest Optima vs. DSV Panalpina AS | BankInvest Optima vs. AP Mller |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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