Correlation Between Ford and CPFL Energia
Can any of the company-specific risk be diversified away by investing in both Ford and CPFL Energia 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 CPFL Energia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and CPFL Energia SA, you can compare the effects of market volatilities on Ford and CPFL Energia 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 CPFL Energia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and CPFL Energia.
Diversification Opportunities for Ford and CPFL Energia
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Ford and CPFL is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and CPFL Energia SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CPFL Energia SA 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 CPFL Energia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CPFL Energia SA has no effect on the direction of Ford i.e., Ford and CPFL Energia go up and down completely randomly.
Pair Corralation between Ford and CPFL Energia
If you would invest (100.00) in CPFL Energia SA on September 12, 2024 and sell it today you would earn a total of 100.00 from holding CPFL Energia SA or generate -100.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 0.0% |
| Values | Daily Returns |
Ford Motor vs. CPFL Energia SA
Performance |
| Timeline |
| Ford Motor |
| CPFL Energia SA |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Ford and CPFL Energia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and CPFL Energia
The main advantage of trading using opposite Ford and CPFL Energia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, CPFL Energia 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 CPFL Energia will offset losses from the drop in CPFL Energia's long position.The idea behind Ford Motor and CPFL Energia SA 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.| CPFL Energia vs. Compania Cervecerias Unidas | CPFL Energia vs. Fomento Economico Mexicano | CPFL Energia vs. Willamette Valley Vineyards | CPFL Energia vs. Aquestive Therapeutics |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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