Correlation Between Ford and CEO Event
Can any of the company-specific risk be diversified away by investing in both Ford and CEO Event 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 CEO Event into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and CEO Event Medya, you can compare the effects of market volatilities on Ford and CEO Event 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 CEO Event. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and CEO Event.
Diversification Opportunities for Ford and CEO Event
Very good diversification
The 3 months correlation between Ford and CEO is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and CEO Event Medya in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CEO Event Medya 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 CEO Event. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CEO Event Medya has no effect on the direction of Ford i.e., Ford and CEO Event go up and down completely randomly.
Pair Corralation between Ford and CEO Event
Taking into account the 90-day investment horizon Ford is expected to generate 8.54 times less return on investment than CEO Event. But when comparing it to its historical volatility, Ford Motor is 1.79 times less risky than CEO Event. It trades about 0.01 of its potential returns per unit of risk. CEO Event Medya is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 1,776 in CEO Event Medya on August 24, 2024 and sell it today you would earn a total of 898.00 from holding CEO Event Medya or generate 50.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.04% |
| Values | Daily Returns |
Ford Motor vs. CEO Event Medya
Performance |
| Timeline |
| Ford Motor |
| CEO Event Medya |
Ford and CEO Event Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and CEO Event
The main advantage of trading using opposite Ford and CEO Event positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, CEO Event 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 CEO Event will offset losses from the drop in CEO Event's long position.The idea behind Ford Motor and CEO Event Medya 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.| CEO Event vs. Brisa Bridgestone Sabanci | CEO Event vs. Dogus Gayrimenkul Yatirim | CEO Event vs. IZDEMIR Enerji Elektrik | CEO Event vs. Margun Enerji Uretim |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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