Correlation Between Ford and Caesarstone
Can any of the company-specific risk be diversified away by investing in both Ford and Caesarstone 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 Caesarstone into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Caesarstone, you can compare the effects of market volatilities on Ford and Caesarstone 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 Caesarstone. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Caesarstone.
Diversification Opportunities for Ford and Caesarstone
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Ford and Caesarstone is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Caesarstone in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caesarstone 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 Caesarstone. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Caesarstone has no effect on the direction of Ford i.e., Ford and Caesarstone go up and down completely randomly.
Pair Corralation between Ford and Caesarstone
Taking into account the 90-day investment horizon Ford Motor is expected to generate 0.66 times more return on investment than Caesarstone. However, Ford Motor is 1.52 times less risky than Caesarstone. It trades about 0.01 of its potential returns per unit of risk. Caesarstone is currently generating about -0.01 per unit of risk. If you would invest 1,132 in Ford Motor on August 24, 2024 and sell it today you would lose (14.00) from holding Ford Motor or give up 1.24% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ford Motor vs. Caesarstone
Performance |
| Timeline |
| Ford Motor |
| Caesarstone |
Ford and Caesarstone Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Caesarstone
The main advantage of trading using opposite Ford and Caesarstone positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Caesarstone 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 Caesarstone will offset losses from the drop in Caesarstone's long position.The idea behind Ford Motor and Caesarstone 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.| Caesarstone vs. Gibraltar Industries | Caesarstone vs. Quanex Building Products | Caesarstone vs. Jeld Wen Holding | Caesarstone vs. Perma Pipe International Holdings |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
Other Complementary Tools
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device |