Correlation Between Ford and Calvert Income
Can any of the company-specific risk be diversified away by investing in both Ford and Calvert Income 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 Calvert Income into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Calvert Income Fund, you can compare the effects of market volatilities on Ford and Calvert Income 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 Calvert Income. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Calvert Income.
Diversification Opportunities for Ford and Calvert Income
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ford and Calvert is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Calvert Income Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Calvert Income 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 Calvert Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Calvert Income has no effect on the direction of Ford i.e., Ford and Calvert Income go up and down completely randomly.
Pair Corralation between Ford and Calvert Income
Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the Calvert Income. In addition to that, Ford is 6.06 times more volatile than Calvert Income Fund. It trades about -0.01 of its total potential returns per unit of risk. Calvert Income Fund is currently generating about 0.08 per unit of volatility. If you would invest 1,364 in Calvert Income Fund on September 12, 2024 and sell it today you would earn a total of 156.00 from holding Calvert Income Fund or generate 11.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ford Motor vs. Calvert Income Fund
Performance |
| Timeline |
| Ford Motor |
| Calvert Income |
Ford and Calvert Income Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Calvert Income
The main advantage of trading using opposite Ford and Calvert Income positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Calvert Income 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 Calvert Income will offset losses from the drop in Calvert Income's long position.The idea behind Ford Motor and Calvert Income Fund 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.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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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