Correlation Between Ford and Currency Exchange
Can any of the company-specific risk be diversified away by investing in both Ford and Currency Exchange 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 Currency Exchange into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Currency Exchange International, you can compare the effects of market volatilities on Ford and Currency Exchange 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 Currency Exchange. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Currency Exchange.
Diversification Opportunities for Ford and Currency Exchange
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ford and Currency is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Currency Exchange Internationa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Currency Exchange 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 Currency Exchange. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Currency Exchange has no effect on the direction of Ford i.e., Ford and Currency Exchange go up and down completely randomly.
Pair Corralation between Ford and Currency Exchange
Taking into account the 90-day investment horizon Ford Motor is expected to generate 1.32 times more return on investment than Currency Exchange. However, Ford is 1.32 times more volatile than Currency Exchange International. It trades about 0.17 of its potential returns per unit of risk. Currency Exchange International is currently generating about -0.33 per unit of risk. If you would invest 1,033 in Ford Motor on August 31, 2024 and sell it today you would earn a total of 77.00 from holding Ford Motor or generate 7.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ford Motor vs. Currency Exchange Internationa
Performance |
| Timeline |
| Ford Motor |
| Currency Exchange |
Ford and Currency Exchange Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Currency Exchange
The main advantage of trading using opposite Ford and Currency Exchange positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Currency Exchange 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 Currency Exchange will offset losses from the drop in Currency Exchange's long position.The idea behind Ford Motor and Currency Exchange International 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.| Currency Exchange vs. Chesswood Group Limited | Currency Exchange vs. Caldwell Partners International | Currency Exchange vs. Firan Technology Group | Currency Exchange vs. K Bro Linen |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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