Correlation Between Ford and Carnegie Clean
Can any of the company-specific risk be diversified away by investing in both Ford and Carnegie Clean 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 Carnegie Clean into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Carnegie Clean Energy, you can compare the effects of market volatilities on Ford and Carnegie Clean 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 Carnegie Clean. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Carnegie Clean.
Diversification Opportunities for Ford and Carnegie Clean
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Ford and Carnegie is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Carnegie Clean Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carnegie Clean Energy 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 Carnegie Clean. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carnegie Clean Energy has no effect on the direction of Ford i.e., Ford and Carnegie Clean go up and down completely randomly.
Pair Corralation between Ford and Carnegie Clean
Taking into account the 90-day investment horizon Ford is expected to generate 25.71 times less return on investment than Carnegie Clean. But when comparing it to its historical volatility, Ford Motor is 18.35 times less risky than Carnegie Clean. It trades about 0.07 of its potential returns per unit of risk. Carnegie Clean Energy is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 2.30 in Carnegie Clean Energy on November 4, 2024 and sell it today you would lose (0.30) from holding Carnegie Clean Energy or give up 13.04% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.0% |
| Values | Daily Returns |
Ford Motor vs. Carnegie Clean Energy
Performance |
| Timeline |
| Ford Motor |
| Carnegie Clean Energy |
Ford and Carnegie Clean Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Carnegie Clean
The main advantage of trading using opposite Ford and Carnegie Clean positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Carnegie Clean 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 Carnegie Clean will offset losses from the drop in Carnegie Clean's long position.The idea behind Ford Motor and Carnegie Clean Energy 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.| Carnegie Clean vs. Astra Energy | Carnegie Clean vs. Brenmiller Energy Ltd | Carnegie Clean vs. Clean Vision Corp | Carnegie Clean vs. Alternus Energy Group |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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