Correlation Between Ford and Cornerstone Advisors
Can any of the company-specific risk be diversified away by investing in both Ford and Cornerstone Advisors 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 Cornerstone Advisors into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Cornerstone Advisors Real, you can compare the effects of market volatilities on Ford and Cornerstone Advisors 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 Cornerstone Advisors. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Cornerstone Advisors.
Diversification Opportunities for Ford and Cornerstone Advisors
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Ford and Cornerstone is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Cornerstone Advisors Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cornerstone Advisors Real 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 Cornerstone Advisors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cornerstone Advisors Real has no effect on the direction of Ford i.e., Ford and Cornerstone Advisors go up and down completely randomly.
Pair Corralation between Ford and Cornerstone Advisors
Taking into account the 90-day investment horizon Ford Motor is expected to generate 2.47 times more return on investment than Cornerstone Advisors. However, Ford is 2.47 times more volatile than Cornerstone Advisors Real. It trades about 0.23 of its potential returns per unit of risk. Cornerstone Advisors Real is currently generating about 0.24 per unit of risk. If you would invest 1,015 in Ford Motor on September 1, 2024 and sell it today you would earn a total of 98.00 from holding Ford Motor or generate 9.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Ford Motor vs. Cornerstone Advisors Real
Performance |
| Timeline |
| Ford Motor |
| Cornerstone Advisors Real |
Ford and Cornerstone Advisors Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Cornerstone Advisors
The main advantage of trading using opposite Ford and Cornerstone Advisors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Cornerstone Advisors 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 Cornerstone Advisors will offset losses from the drop in Cornerstone Advisors' long position.The idea behind Ford Motor and Cornerstone Advisors Real 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.| Cornerstone Advisors vs. Domini Impact Bond | Cornerstone Advisors vs. Domini Impact International | Cornerstone Advisors vs. Amer Beacon Ark | Cornerstone Advisors vs. Domini International Opportunities |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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