Correlation Between Ford and Cogent Biosciences
Can any of the company-specific risk be diversified away by investing in both Ford and Cogent Biosciences 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 Cogent Biosciences into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Cogent Biosciences, you can compare the effects of market volatilities on Ford and Cogent Biosciences 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 Cogent Biosciences. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Cogent Biosciences.
Diversification Opportunities for Ford and Cogent Biosciences
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ford and Cogent is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Cogent Biosciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cogent Biosciences 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 Cogent Biosciences. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cogent Biosciences has no effect on the direction of Ford i.e., Ford and Cogent Biosciences go up and down completely randomly.
Pair Corralation between Ford and Cogent Biosciences
Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the Cogent Biosciences. But the stock apears to be less risky and, when comparing its historical volatility, Ford Motor is 2.62 times less risky than Cogent Biosciences. The stock trades about 0.0 of its potential returns per unit of risk. The Cogent Biosciences is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 1,150 in Cogent Biosciences on August 31, 2024 and sell it today you would lose (199.00) from holding Cogent Biosciences or give up 17.3% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ford Motor vs. Cogent Biosciences
Performance |
| Timeline |
| Ford Motor |
| Cogent Biosciences |
Ford and Cogent Biosciences Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Cogent Biosciences
The main advantage of trading using opposite Ford and Cogent Biosciences positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Cogent Biosciences 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 Cogent Biosciences will offset losses from the drop in Cogent Biosciences' long position.The idea behind Ford Motor and Cogent Biosciences 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.| Cogent Biosciences vs. Larimar Therapeutics | Cogent Biosciences vs. Kura Oncology | Cogent Biosciences vs. Kiniksa Pharmaceuticals | Cogent Biosciences vs. Ideaya Biosciences |
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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