Correlation Between Ford and Bankinter
Can any of the company-specific risk be diversified away by investing in both Ford and Bankinter 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 Bankinter into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Bankinter SA, you can compare the effects of market volatilities on Ford and Bankinter 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 Bankinter. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Bankinter.
Diversification Opportunities for Ford and Bankinter
Good diversification
The 3 months correlation between Ford and Bankinter is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Bankinter SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bankinter SA 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 Bankinter. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bankinter SA has no effect on the direction of Ford i.e., Ford and Bankinter go up and down completely randomly.
Pair Corralation between Ford and Bankinter
Taking into account the 90-day investment horizon Ford is expected to generate 5.78 times less return on investment than Bankinter. But when comparing it to its historical volatility, Ford Motor is 1.57 times less risky than Bankinter. It trades about 0.01 of its potential returns per unit of risk. Bankinter SA is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 641.00 in Bankinter SA on September 1, 2024 and sell it today you would earn a total of 156.00 from holding Bankinter SA or generate 24.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 67.47% |
| Values | Daily Returns |
Ford Motor vs. Bankinter SA
Performance |
| Timeline |
| Ford Motor |
| Bankinter SA |
Ford and Bankinter Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Bankinter
The main advantage of trading using opposite Ford and Bankinter positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Bankinter 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 Bankinter will offset losses from the drop in Bankinter's long position.The idea behind Ford Motor and Bankinter SA 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.| Bankinter vs. Piraeus Bank SA | Bankinter vs. Turkiye Garanti Bankasi | Bankinter vs. Delhi Bank Corp | Bankinter vs. Uwharrie Capital Corp |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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