Correlation Between Ford and Amundi Climate
Can any of the company-specific risk be diversified away by investing in both Ford and Amundi Climate 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 Amundi Climate into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Amundi Climate Transition, you can compare the effects of market volatilities on Ford and Amundi Climate 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 Amundi Climate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Amundi Climate.
Diversification Opportunities for Ford and Amundi Climate
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ford and Amundi is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Amundi Climate Transition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amundi Climate Transition 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 Amundi Climate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amundi Climate Transition has no effect on the direction of Ford i.e., Ford and Amundi Climate go up and down completely randomly.
Pair Corralation between Ford and Amundi Climate
Taking into account the 90-day investment horizon Ford Motor is expected to generate 8.63 times more return on investment than Amundi Climate. However, Ford is 8.63 times more volatile than Amundi Climate Transition. It trades about 0.05 of its potential returns per unit of risk. Amundi Climate Transition is currently generating about -0.09 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 Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ford Motor vs. Amundi Climate Transition
Performance |
| Timeline |
| Ford Motor |
| Amundi Climate Transition |
Ford and Amundi Climate Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Amundi Climate
The main advantage of trading using opposite Ford and Amundi Climate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Amundi Climate 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 Amundi Climate will offset losses from the drop in Amundi Climate's long position.The idea behind Ford Motor and Amundi Climate Transition 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.| Amundi Climate vs. Pioneer Fundamental Growth | Amundi Climate vs. Pioneer Global Equity | Amundi Climate vs. Pioneer Disciplined Value | Amundi Climate vs. Pioneer Disciplined Value |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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