Correlation Between Ford and CaliberCos
Can any of the company-specific risk be diversified away by investing in both Ford and CaliberCos 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 CaliberCos into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and CaliberCos Class A, you can compare the effects of market volatilities on Ford and CaliberCos 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 CaliberCos. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and CaliberCos.
Diversification Opportunities for Ford and CaliberCos
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between Ford and CaliberCos is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and CaliberCos Class A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CaliberCos Class A 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 CaliberCos. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CaliberCos Class A has no effect on the direction of Ford i.e., Ford and CaliberCos go up and down completely randomly.
Pair Corralation between Ford and CaliberCos
Taking into account the 90-day investment horizon Ford Motor is expected to generate 0.31 times more return on investment than CaliberCos. However, Ford Motor is 3.18 times less risky than CaliberCos. It trades about 0.0 of its potential returns per unit of risk. CaliberCos Class A is currently generating about -0.02 per unit of risk. If you would invest 1,048 in Ford Motor on September 12, 2024 and sell it today you would lose (7.00) from holding Ford Motor or give up 0.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ford Motor vs. CaliberCos Class A
Performance |
| Timeline |
| Ford Motor |
| CaliberCos Class A |
Ford and CaliberCos Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and CaliberCos
The main advantage of trading using opposite Ford and CaliberCos positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, CaliberCos 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 CaliberCos will offset losses from the drop in CaliberCos' long position.The idea behind Ford Motor and CaliberCos Class A 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.| CaliberCos vs. Contagious Gaming | CaliberCos vs. Newpark Resources | CaliberCos vs. Tritent International Agriculture | CaliberCos vs. Tyson 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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