Correlation Between Ford and Ceridian HCM
Can any of the company-specific risk be diversified away by investing in both Ford and Ceridian HCM 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 Ceridian HCM into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Ceridian HCM Holding, you can compare the effects of market volatilities on Ford and Ceridian HCM 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 Ceridian HCM. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Ceridian HCM.
Diversification Opportunities for Ford and Ceridian HCM
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Ford and Ceridian is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Ceridian HCM Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ceridian HCM Holding 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 Ceridian HCM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ceridian HCM Holding has no effect on the direction of Ford i.e., Ford and Ceridian HCM go up and down completely randomly.
Pair Corralation between Ford and Ceridian HCM
Taking into account the 90-day investment horizon Ford is expected to generate 1.9 times less return on investment than Ceridian HCM. But when comparing it to its historical volatility, Ford Motor is 1.01 times less risky than Ceridian HCM. It trades about 0.01 of its potential returns per unit of risk. Ceridian HCM Holding is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 6,582 in Ceridian HCM Holding on August 29, 2024 and sell it today you would earn a total of 260.00 from holding Ceridian HCM Holding or generate 3.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 31.45% |
| Values | Daily Returns |
Ford Motor vs. Ceridian HCM Holding
Performance |
| Timeline |
| Ford Motor |
| Ceridian HCM Holding |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Ford and Ceridian HCM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Ceridian HCM
The main advantage of trading using opposite Ford and Ceridian HCM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Ceridian HCM 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 Ceridian HCM will offset losses from the drop in Ceridian HCM's long position.The idea behind Ford Motor and Ceridian HCM Holding 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.| Ceridian HCM vs. Paycor HCM | Ceridian HCM vs. Manhattan Associates | Ceridian HCM vs. Paycom Soft | Ceridian HCM vs. Paylocity Holdng |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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