Correlation Between Ford and Piraeus Bank
Can any of the company-specific risk be diversified away by investing in both Ford and Piraeus Bank 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 Piraeus Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Piraeus Bank SA, you can compare the effects of market volatilities on Ford and Piraeus Bank 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 Piraeus Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Piraeus Bank.
Diversification Opportunities for Ford and Piraeus Bank
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Ford and Piraeus is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Piraeus Bank SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Piraeus Bank 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 Piraeus Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Piraeus Bank SA has no effect on the direction of Ford i.e., Ford and Piraeus Bank go up and down completely randomly.
Pair Corralation between Ford and Piraeus Bank
Taking into account the 90-day investment horizon Ford is expected to generate 6.76 times less return on investment than Piraeus Bank. But when comparing it to its historical volatility, Ford Motor is 1.96 times less risky than Piraeus Bank. It trades about 0.02 of its potential returns per unit of risk. Piraeus Bank SA is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 161.00 in Piraeus Bank SA on August 28, 2024 and sell it today you would earn a total of 215.00 from holding Piraeus Bank SA or generate 133.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ford Motor vs. Piraeus Bank SA
Performance |
| Timeline |
| Ford Motor |
| Piraeus Bank SA |
Ford and Piraeus Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Piraeus Bank
The main advantage of trading using opposite Ford and Piraeus Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Piraeus Bank 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 Piraeus Bank will offset losses from the drop in Piraeus Bank's long position.The idea behind Ford Motor and Piraeus Bank 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.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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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