Correlation Between Ford and Ubs Us
Can any of the company-specific risk be diversified away by investing in both Ford and Ubs Us 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 Ubs Us into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Ubs Small Cap, you can compare the effects of market volatilities on Ford and Ubs Us 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 Ubs Us. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Ubs Us.
Diversification Opportunities for Ford and Ubs Us
Poor diversification
The 3 months correlation between Ford and UBS is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Ubs Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ubs Small Cap 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 Ubs Us. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ubs Small Cap has no effect on the direction of Ford i.e., Ford and Ubs Us go up and down completely randomly.
Pair Corralation between Ford and Ubs Us
Taking into account the 90-day investment horizon Ford Motor is expected to generate 1.39 times more return on investment than Ubs Us. However, Ford is 1.39 times more volatile than Ubs Small Cap. It trades about 0.16 of its potential returns per unit of risk. Ubs Small Cap is currently generating about 0.16 per unit of risk. If you would invest 965.00 in Ford Motor on November 2, 2024 and sell it today you would earn a total of 51.00 from holding Ford Motor or generate 5.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ford Motor vs. Ubs Small Cap
Performance |
| Timeline |
| Ford Motor |
| Ubs Small Cap |
Ford and Ubs Us Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Ubs Us
The main advantage of trading using opposite Ford and Ubs Us positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Ubs Us 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 Ubs Us will offset losses from the drop in Ubs Us' long position.The idea behind Ford Motor and Ubs Small Cap 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.| Ubs Us vs. Pace Smallmedium Value | Ubs Us vs. Pace International Equity | Ubs Us vs. Ubs Allocation Fund | Ubs Us vs. Ubs Allocation Fund |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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