Correlation Between Ford and Brickworks
Can any of the company-specific risk be diversified away by investing in both Ford and Brickworks 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 Brickworks into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Brickworks, you can compare the effects of market volatilities on Ford and Brickworks 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 Brickworks. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Brickworks.
Diversification Opportunities for Ford and Brickworks
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between Ford and Brickworks is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Brickworks in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brickworks 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 Brickworks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brickworks has no effect on the direction of Ford i.e., Ford and Brickworks go up and down completely randomly.
Pair Corralation between Ford and Brickworks
Taking into account the 90-day investment horizon Ford is expected to generate 2.7 times less return on investment than Brickworks. In addition to that, Ford is 1.83 times more volatile than Brickworks. It trades about 0.01 of its total potential returns per unit of risk. Brickworks is currently generating about 0.04 per unit of volatility. If you would invest 2,063 in Brickworks on September 3, 2024 and sell it today you would earn a total of 563.00 from holding Brickworks or generate 27.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.2% |
| Values | Daily Returns |
Ford Motor vs. Brickworks
Performance |
| Timeline |
| Ford Motor |
| Brickworks |
Ford and Brickworks Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Brickworks
The main advantage of trading using opposite Ford and Brickworks positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Brickworks 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 Brickworks will offset losses from the drop in Brickworks' long position.| Ford vs. GreenPower Motor | Ford vs. ZEEKR Intelligent Technology | Ford vs. Volcon Inc | Ford vs. ECD Automotive Design |
| Brickworks vs. Ainsworth Game Technology | Brickworks vs. Advanced Braking Technology | Brickworks vs. Queste Communications | Brickworks vs. Australian Unity Office |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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