Correlation Between Ford and Cooper Tire
Can any of the company-specific risk be diversified away by investing in both Ford and Cooper Tire 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 Cooper Tire into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Cooper Tire Rubber, you can compare the effects of market volatilities on Ford and Cooper Tire 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 Cooper Tire. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Cooper Tire.
Diversification Opportunities for Ford and Cooper Tire
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Ford and Cooper is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Cooper Tire Rubber in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cooper Tire Rubber 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 Cooper Tire. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cooper Tire Rubber has no effect on the direction of Ford i.e., Ford and Cooper Tire go up and down completely randomly.
Pair Corralation between Ford and Cooper Tire
If you would invest (100.00) in Cooper Tire Rubber on September 13, 2024 and sell it today you would earn a total of 100.00 from holding Cooper Tire Rubber 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. Cooper Tire Rubber
Performance |
| Timeline |
| Ford Motor |
| Cooper Tire Rubber |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Ford and Cooper Tire Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Cooper Tire
The main advantage of trading using opposite Ford and Cooper Tire positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Cooper Tire 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 Cooper Tire will offset losses from the drop in Cooper Tire's long position.The idea behind Ford Motor and Cooper Tire Rubber 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.| Cooper Tire vs. FitLife Brands, Common | Cooper Tire vs. ServiceNow | Cooper Tire vs. Sapiens International | Cooper Tire vs. Bridgford Foods |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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