Correlation Between Ford and CENTRAL PUERTO
Can any of the company-specific risk be diversified away by investing in both Ford and CENTRAL PUERTO 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 CENTRAL PUERTO into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and CENTRAL PUERTO ADR1, you can compare the effects of market volatilities on Ford and CENTRAL PUERTO 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 CENTRAL PUERTO. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and CENTRAL PUERTO.
Diversification Opportunities for Ford and CENTRAL PUERTO
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Ford and CENTRAL is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and CENTRAL PUERTO ADR1 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CENTRAL PUERTO ADR1 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 CENTRAL PUERTO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CENTRAL PUERTO ADR1 has no effect on the direction of Ford i.e., Ford and CENTRAL PUERTO go up and down completely randomly.
Pair Corralation between Ford and CENTRAL PUERTO
Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the CENTRAL PUERTO. But the stock apears to be less risky and, when comparing its historical volatility, Ford Motor is 1.69 times less risky than CENTRAL PUERTO. The stock trades about -0.18 of its potential returns per unit of risk. The CENTRAL PUERTO ADR1 is currently generating about 0.39 of returns per unit of risk over similar time horizon. If you would invest 1,095 in CENTRAL PUERTO ADR1 on September 13, 2024 and sell it today you would earn a total of 285.00 from holding CENTRAL PUERTO ADR1 or generate 26.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Ford Motor vs. CENTRAL PUERTO ADR1
Performance |
| Timeline |
| Ford Motor |
| CENTRAL PUERTO ADR1 |
Ford and CENTRAL PUERTO Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and CENTRAL PUERTO
The main advantage of trading using opposite Ford and CENTRAL PUERTO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, CENTRAL PUERTO 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 CENTRAL PUERTO will offset losses from the drop in CENTRAL PUERTO's long position.The idea behind Ford Motor and CENTRAL PUERTO ADR1 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.| CENTRAL PUERTO vs. Eidesvik Offshore ASA | CENTRAL PUERTO vs. ECHO INVESTMENT ZY | CENTRAL PUERTO vs. REGAL ASIAN INVESTMENTS | CENTRAL PUERTO vs. REINET INVESTMENTS SCA |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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