Correlation Between Ford and Byggmax Group
Can any of the company-specific risk be diversified away by investing in both Ford and Byggmax Group 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 Byggmax Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Byggmax Group AB, you can compare the effects of market volatilities on Ford and Byggmax Group 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 Byggmax Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Byggmax Group.
Diversification Opportunities for Ford and Byggmax Group
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Ford and Byggmax is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Byggmax Group AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Byggmax Group AB 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 Byggmax Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Byggmax Group AB has no effect on the direction of Ford i.e., Ford and Byggmax Group go up and down completely randomly.
Pair Corralation between Ford and Byggmax Group
Taking into account the 90-day investment horizon Ford Motor is expected to generate 0.75 times more return on investment than Byggmax Group. However, Ford Motor is 1.34 times less risky than Byggmax Group. It trades about 0.18 of its potential returns per unit of risk. Byggmax Group AB is currently generating about -0.1 per unit of risk. If you would invest 1,022 in Ford Motor on September 4, 2024 and sell it today you would earn a total of 76.00 from holding Ford Motor or generate 7.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Ford Motor vs. Byggmax Group AB
Performance |
| Timeline |
| Ford Motor |
| Byggmax Group AB |
Ford and Byggmax Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Byggmax Group
The main advantage of trading using opposite Ford and Byggmax Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Byggmax Group 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 Byggmax Group will offset losses from the drop in Byggmax Group's long position.The idea behind Ford Motor and Byggmax Group AB 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.| Byggmax Group vs. GALENA MINING LTD | Byggmax Group vs. COMBA TELECOM SYST | Byggmax Group vs. SK TELECOM TDADR | Byggmax Group vs. GRIFFIN MINING LTD |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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