Correlation Between Ford and Cannagrow Holdings
Can any of the company-specific risk be diversified away by investing in both Ford and Cannagrow Holdings 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 Cannagrow Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Cannagrow Holdings, you can compare the effects of market volatilities on Ford and Cannagrow Holdings 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 Cannagrow Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Cannagrow Holdings.
Diversification Opportunities for Ford and Cannagrow Holdings
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between Ford and Cannagrow is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Cannagrow Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cannagrow Holdings 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 Cannagrow Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cannagrow Holdings has no effect on the direction of Ford i.e., Ford and Cannagrow Holdings go up and down completely randomly.
Pair Corralation between Ford and Cannagrow Holdings
Taking into account the 90-day investment horizon Ford is expected to generate 99.73 times less return on investment than Cannagrow Holdings. But when comparing it to its historical volatility, Ford Motor is 12.04 times less risky than Cannagrow Holdings. It trades about 0.01 of its potential returns per unit of risk. Cannagrow Holdings is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 2.00 in Cannagrow Holdings on August 29, 2024 and sell it today you would earn a total of 0.80 from holding Cannagrow Holdings or generate 40.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 74.81% |
| Values | Daily Returns |
Ford Motor vs. Cannagrow Holdings
Performance |
| Timeline |
| Ford Motor |
| Cannagrow Holdings |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Ford and Cannagrow Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Cannagrow Holdings
The main advantage of trading using opposite Ford and Cannagrow Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Cannagrow Holdings 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 Cannagrow Holdings will offset losses from the drop in Cannagrow Holdings' long position.The idea behind Ford Motor and Cannagrow Holdings 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.| Cannagrow Holdings vs. Dexterra Group | Cannagrow Holdings vs. Intertek Group Plc | Cannagrow Holdings vs. Wildpack Beverage | Cannagrow Holdings vs. DATA Communications Management |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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