Correlation Between Ford and CIA ENGER
Can any of the company-specific risk be diversified away by investing in both Ford and CIA ENGER 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 CIA ENGER into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and CIA ENGER ADR, you can compare the effects of market volatilities on Ford and CIA ENGER 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 CIA ENGER. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and CIA ENGER.
Diversification Opportunities for Ford and CIA ENGER
Very good diversification
The 3 months correlation between Ford and CIA is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and CIA ENGER ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CIA ENGER ADR 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 CIA ENGER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CIA ENGER ADR has no effect on the direction of Ford i.e., Ford and CIA ENGER go up and down completely randomly.
Pair Corralation between Ford and CIA ENGER
If you would invest 965.00 in Ford Motor on November 2, 2024 and sell it today you would earn a total of 51.00 from holding Ford Motor or generate 5.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 90.48% |
| Values | Daily Returns |
Ford Motor vs. CIA ENGER ADR
Performance |
| Timeline |
| Ford Motor |
| CIA ENGER ADR |
Ford and CIA ENGER Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and CIA ENGER
The main advantage of trading using opposite Ford and CIA ENGER positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, CIA ENGER 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 CIA ENGER will offset losses from the drop in CIA ENGER's long position.The idea behind Ford Motor and CIA ENGER ADR 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.| CIA ENGER vs. Inspire Medical Systems | CIA ENGER vs. MAGNUM MINING EXP | CIA ENGER vs. Globex Mining Enterprises | CIA ENGER vs. GALENA MINING LTD |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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