Correlation Between Ford and Brownies Marine
Can any of the company-specific risk be diversified away by investing in both Ford and Brownies Marine 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 Brownies Marine into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Brownies Marine Group, you can compare the effects of market volatilities on Ford and Brownies Marine 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 Brownies Marine. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Brownies Marine.
Diversification Opportunities for Ford and Brownies Marine
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ford and Brownies is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Brownies Marine Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brownies Marine Group 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 Brownies Marine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brownies Marine Group has no effect on the direction of Ford i.e., Ford and Brownies Marine go up and down completely randomly.
Pair Corralation between Ford and Brownies Marine
Taking into account the 90-day investment horizon Ford is expected to generate 1.37 times less return on investment than Brownies Marine. But when comparing it to its historical volatility, Ford Motor is 10.68 times less risky than Brownies Marine. It trades about 0.17 of its potential returns per unit of risk. Brownies Marine Group is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 1.19 in Brownies Marine Group on August 31, 2024 and sell it today you would lose (0.39) from holding Brownies Marine Group or give up 32.77% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ford Motor vs. Brownies Marine Group
Performance |
| Timeline |
| Ford Motor |
| Brownies Marine Group |
Ford and Brownies Marine Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Brownies Marine
The main advantage of trading using opposite Ford and Brownies Marine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Brownies Marine 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 Brownies Marine will offset losses from the drop in Brownies Marine's long position.The idea behind Ford Motor and Brownies Marine Group 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.| Brownies Marine vs. TWC Enterprises Limited | Brownies Marine vs. ANTA Sports Products | Brownies Marine vs. ANTA Sports Products | Brownies Marine vs. Golden Heaven Group |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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