Correlation Between Ford and BTB Real
Can any of the company-specific risk be diversified away by investing in both Ford and BTB Real 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 BTB Real into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and BTB Real Estate, you can compare the effects of market volatilities on Ford and BTB Real 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 BTB Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and BTB Real.
Diversification Opportunities for Ford and BTB Real
Good diversification
The 3 months correlation between Ford and BTB is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and BTB Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BTB Real Estate 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 BTB Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BTB Real Estate has no effect on the direction of Ford i.e., Ford and BTB Real go up and down completely randomly.
Pair Corralation between Ford and BTB Real
Taking into account the 90-day investment horizon Ford is expected to generate 2.79 times less return on investment than BTB Real. In addition to that, Ford is 1.27 times more volatile than BTB Real Estate. It trades about 0.02 of its total potential returns per unit of risk. BTB Real Estate is currently generating about 0.08 per unit of volatility. If you would invest 192.00 in BTB Real Estate on September 3, 2024 and sell it today you would earn a total of 60.00 from holding BTB Real Estate or generate 31.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 81.78% |
| Values | Daily Returns |
Ford Motor vs. BTB Real Estate
Performance |
| Timeline |
| Ford Motor |
| BTB Real Estate |
Ford and BTB Real Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and BTB Real
The main advantage of trading using opposite Ford and BTB Real positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, BTB Real 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 BTB Real will offset losses from the drop in BTB Real's long position.| Ford vs. GreenPower Motor | Ford vs. ZEEKR Intelligent Technology | Ford vs. Volcon Inc | Ford vs. Ford Motor |
| BTB Real vs. City Office | BTB Real vs. Vornado Realty Trust | BTB Real vs. Cousins Properties Incorporated | BTB Real vs. Highwoods Properties |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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