Correlation Between Ford and Conestoga Micro
Can any of the company-specific risk be diversified away by investing in both Ford and Conestoga Micro 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 Conestoga Micro into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Conestoga Micro Cap, you can compare the effects of market volatilities on Ford and Conestoga Micro 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 Conestoga Micro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Conestoga Micro.
Diversification Opportunities for Ford and Conestoga Micro
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ford and Conestoga is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Conestoga Micro Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Conestoga Micro Cap 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 Conestoga Micro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Conestoga Micro Cap has no effect on the direction of Ford i.e., Ford and Conestoga Micro go up and down completely randomly.
Pair Corralation between Ford and Conestoga Micro
Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the Conestoga Micro. In addition to that, Ford is 1.56 times more volatile than Conestoga Micro Cap. It trades about -0.01 of its total potential returns per unit of risk. Conestoga Micro Cap is currently generating about 0.1 per unit of volatility. If you would invest 699.00 in Conestoga Micro Cap on September 1, 2024 and sell it today you would earn a total of 138.00 from holding Conestoga Micro Cap or generate 19.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.21% |
| Values | Daily Returns |
Ford Motor vs. Conestoga Micro Cap
Performance |
| Timeline |
| Ford Motor |
| Conestoga Micro Cap |
Ford and Conestoga Micro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Conestoga Micro
The main advantage of trading using opposite Ford and Conestoga Micro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Conestoga Micro 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 Conestoga Micro will offset losses from the drop in Conestoga Micro's long position.The idea behind Ford Motor and Conestoga Micro Cap 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.| Conestoga Micro vs. Rationalpier 88 Convertible | Conestoga Micro vs. Virtus Convertible | Conestoga Micro vs. Calamos Dynamic Convertible | Conestoga Micro vs. Harbor Vertible Securities |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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