Correlation Between Ford and Pop Culture
Can any of the company-specific risk be diversified away by investing in both Ford and Pop Culture 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 Pop Culture into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Pop Culture Group, you can compare the effects of market volatilities on Ford and Pop Culture 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 Pop Culture. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Pop Culture.
Diversification Opportunities for Ford and Pop Culture
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Ford and Pop is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Pop Culture Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pop Culture Group 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 Pop Culture. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pop Culture Group has no effect on the direction of Ford i.e., Ford and Pop Culture go up and down completely randomly.
Pair Corralation between Ford and Pop Culture
Taking into account the 90-day investment horizon Ford Motor is expected to generate 0.91 times more return on investment than Pop Culture. However, Ford Motor is 1.09 times less risky than Pop Culture. It trades about 0.05 of its potential returns per unit of risk. Pop Culture Group is currently generating about -0.11 per unit of risk. If you would invest 1,092 in Ford Motor on August 26, 2024 and sell it today you would earn a total of 26.00 from holding Ford Motor or generate 2.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ford Motor vs. Pop Culture Group
Performance |
| Timeline |
| Ford Motor |
| Pop Culture Group |
Ford and Pop Culture Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Pop Culture
The main advantage of trading using opposite Ford and Pop Culture positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Pop Culture 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 Pop Culture will offset losses from the drop in Pop Culture's long position.The idea behind Ford Motor and Pop Culture Group 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.| Pop Culture vs. MultiMetaVerse Holdings Limited | Pop Culture vs. Hollywall Entertainment | Pop Culture vs. Kuke Music Holding | Pop Culture vs. Reading International |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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