Correlation Between Ford and Cyber Security
Can any of the company-specific risk be diversified away by investing in both Ford and Cyber Security 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 Cyber Security into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Cyber Security 1, you can compare the effects of market volatilities on Ford and Cyber Security 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 Cyber Security. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Cyber Security.
Diversification Opportunities for Ford and Cyber Security
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Ford and Cyber is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Cyber Security 1 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cyber Security 1 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 Cyber Security. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cyber Security 1 has no effect on the direction of Ford i.e., Ford and Cyber Security go up and down completely randomly.
Pair Corralation between Ford and Cyber Security
Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the Cyber Security. But the stock apears to be less risky and, when comparing its historical volatility, Ford Motor is 5.37 times less risky than Cyber Security. The stock trades about -0.25 of its potential returns per unit of risk. The Cyber Security 1 is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 0.70 in Cyber Security 1 on October 13, 2024 and sell it today you would earn a total of 0.14 from holding Cyber Security 1 or generate 20.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 84.21% |
| Values | Daily Returns |
Ford Motor vs. Cyber Security 1
Performance |
| Timeline |
| Ford Motor |
| Cyber Security 1 |
Ford and Cyber Security Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Cyber Security
The main advantage of trading using opposite Ford and Cyber Security positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Cyber Security 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 Cyber Security will offset losses from the drop in Cyber Security's long position.| Ford vs. Canoo Inc | Ford vs. Aquagold International | Ford vs. Morningstar Unconstrained Allocation | Ford vs. Thrivent High Yield |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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