Correlation Between Ford and IShares Premium
Can any of the company-specific risk be diversified away by investing in both Ford and IShares Premium 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 IShares Premium into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and iShares Premium Money, you can compare the effects of market volatilities on Ford and IShares Premium 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 IShares Premium. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and IShares Premium.
Diversification Opportunities for Ford and IShares Premium
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Ford and IShares is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and iShares Premium Money in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Premium Money 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 IShares Premium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Premium Money has no effect on the direction of Ford i.e., Ford and IShares Premium go up and down completely randomly.
Pair Corralation between Ford and IShares Premium
Taking into account the 90-day investment horizon Ford is expected to generate 1.32 times less return on investment than IShares Premium. In addition to that, Ford is 145.63 times more volatile than iShares Premium Money. It trades about 0.01 of its total potential returns per unit of risk. iShares Premium Money is currently generating about 1.1 per unit of volatility. If you would invest 4,836 in iShares Premium Money on August 25, 2024 and sell it today you would earn a total of 166.00 from holding iShares Premium Money or generate 3.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.47% |
| Values | Daily Returns |
Ford Motor vs. iShares Premium Money
Performance |
| Timeline |
| Ford Motor |
| iShares Premium Money |
Ford and IShares Premium Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and IShares Premium
The main advantage of trading using opposite Ford and IShares Premium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, IShares Premium 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 IShares Premium will offset losses from the drop in IShares Premium's long position.The idea behind Ford Motor and iShares Premium Money 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.| IShares Premium vs. iShares 1 5 Year | IShares Premium vs. iShares Global Infrastructure | IShares Premium vs. iShares Global Real | IShares Premium vs. iShares Global Monthly |
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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