Correlation Between Ford and Congressional Effect
Can any of the company-specific risk be diversified away by investing in both Ford and Congressional Effect 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 Congressional Effect into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Congressional Effect Fund, you can compare the effects of market volatilities on Ford and Congressional Effect 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 Congressional Effect. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Congressional Effect.
Diversification Opportunities for Ford and Congressional Effect
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ford and Congressional is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Congressional Effect Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Congressional Effect 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 Congressional Effect. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Congressional Effect has no effect on the direction of Ford i.e., Ford and Congressional Effect go up and down completely randomly.
Pair Corralation between Ford and Congressional Effect
Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the Congressional Effect. In addition to that, Ford is 3.25 times more volatile than Congressional Effect Fund. It trades about 0.0 of its total potential returns per unit of risk. Congressional Effect Fund is currently generating about 0.03 per unit of volatility. If you would invest 1,129 in Congressional Effect Fund on September 3, 2024 and sell it today you would earn a total of 29.00 from holding Congressional Effect Fund or generate 2.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ford Motor vs. Congressional Effect Fund
Performance |
| Timeline |
| Ford Motor |
| Congressional Effect |
Ford and Congressional Effect Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Congressional Effect
The main advantage of trading using opposite Ford and Congressional Effect positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Congressional Effect 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 Congressional Effect will offset losses from the drop in Congressional Effect's long position.| Ford vs. GreenPower Motor | Ford vs. ZEEKR Intelligent Technology | Ford vs. Volcon Inc | Ford vs. Ford Motor |
| Congressional Effect vs. Dws Government Money | Congressional Effect vs. Schwab Treasury Money | Congressional Effect vs. Rbc Funds Trust | Congressional Effect vs. Aig Government Money |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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