Correlation Between Ford and FT Cboe
Can any of the company-specific risk be diversified away by investing in both Ford and FT Cboe 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 FT Cboe into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and FT Cboe Vest, you can compare the effects of market volatilities on Ford and FT Cboe 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 FT Cboe. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and FT Cboe.
Diversification Opportunities for Ford and FT Cboe
Weak diversification
The 3 months correlation between Ford and BUFD is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and FT Cboe Vest in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FT Cboe Vest 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 FT Cboe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FT Cboe Vest has no effect on the direction of Ford i.e., Ford and FT Cboe go up and down completely randomly.
Pair Corralation between Ford and FT Cboe
Taking into account the 90-day investment horizon Ford is expected to generate 2.89 times less return on investment than FT Cboe. In addition to that, Ford is 8.09 times more volatile than FT Cboe Vest. It trades about 0.01 of its total potential returns per unit of risk. FT Cboe Vest is currently generating about 0.16 per unit of volatility. If you would invest 2,523 in FT Cboe Vest on August 27, 2024 and sell it today you would earn a total of 29.00 from holding FT Cboe Vest or generate 1.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ford Motor vs. FT Cboe Vest
Performance |
| Timeline |
| Ford Motor |
| FT Cboe Vest |
Ford and FT Cboe Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and FT Cboe
The main advantage of trading using opposite Ford and FT Cboe positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, FT Cboe 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 FT Cboe will offset losses from the drop in FT Cboe's long position.The idea behind Ford Motor and FT Cboe Vest 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
Other Complementary Tools
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators |