Correlation Between Ford and Fibra Terrafina
Can any of the company-specific risk be diversified away by investing in both Ford and Fibra Terrafina 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 Fibra Terrafina into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Fibra Terrafina, you can compare the effects of market volatilities on Ford and Fibra Terrafina 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 Fibra Terrafina. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Fibra Terrafina.
Diversification Opportunities for Ford and Fibra Terrafina
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ford and Fibra is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Fibra Terrafina in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fibra Terrafina 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 Fibra Terrafina. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fibra Terrafina has no effect on the direction of Ford i.e., Ford and Fibra Terrafina go up and down completely randomly.
Pair Corralation between Ford and Fibra Terrafina
Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the Fibra Terrafina. But the stock apears to be less risky and, when comparing its historical volatility, Ford Motor is 2.62 times less risky than Fibra Terrafina. The stock trades about 0.0 of its potential returns per unit of risk. The Fibra Terrafina is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 194.00 in Fibra Terrafina on September 4, 2024 and sell it today you would lose (14.00) from holding Fibra Terrafina or give up 7.22% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 88.74% |
| Values | Daily Returns |
Ford Motor vs. Fibra Terrafina
Performance |
| Timeline |
| Ford Motor |
| Fibra Terrafina |
Ford and Fibra Terrafina Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Fibra Terrafina
The main advantage of trading using opposite Ford and Fibra Terrafina positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Fibra Terrafina 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 Fibra Terrafina will offset losses from the drop in Fibra Terrafina's long position.The idea behind Ford Motor and Fibra Terrafina 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.| Fibra Terrafina vs. Big Yellow Group | Fibra Terrafina vs. Plymouth Industrial REIT | Fibra Terrafina vs. LXP Industrial Trust | Fibra Terrafina vs. Terreno Realty |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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