Correlation Between Ford and Bourse Direct
Can any of the company-specific risk be diversified away by investing in both Ford and Bourse Direct 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 Bourse Direct into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Bourse Direct SA, you can compare the effects of market volatilities on Ford and Bourse Direct 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 Bourse Direct. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Bourse Direct.
Diversification Opportunities for Ford and Bourse Direct
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ford and Bourse is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Bourse Direct SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bourse Direct 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 Bourse Direct. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bourse Direct SA has no effect on the direction of Ford i.e., Ford and Bourse Direct go up and down completely randomly.
Pair Corralation between Ford and Bourse Direct
Taking into account the 90-day investment horizon Ford Motor is expected to generate 1.35 times more return on investment than Bourse Direct. However, Ford is 1.35 times more volatile than Bourse Direct SA. It trades about 0.05 of its potential returns per unit of risk. Bourse Direct SA is currently generating about -0.09 per unit of risk. If you would invest 1,092 in Ford Motor on August 26, 2024 and sell it today you would earn a total of 26.00 from holding Ford Motor or generate 2.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ford Motor vs. Bourse Direct SA
Performance |
| Timeline |
| Ford Motor |
| Bourse Direct SA |
Ford and Bourse Direct Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Bourse Direct
The main advantage of trading using opposite Ford and Bourse Direct positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Bourse Direct 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 Bourse Direct will offset losses from the drop in Bourse Direct's long position.The idea behind Ford Motor and Bourse Direct 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.| Bourse Direct vs. Stef SA | Bourse Direct vs. NRJ Group | Bourse Direct vs. Savencia SA | Bourse Direct vs. ABC arbitrage SA |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
Other Complementary Tools
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing |