Correlation Between Ford and DigitalBridge
Can any of the company-specific risk be diversified away by investing in both Ford and DigitalBridge 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 DigitalBridge into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and DigitalBridge Group, you can compare the effects of market volatilities on Ford and DigitalBridge 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 DigitalBridge. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and DigitalBridge.
Diversification Opportunities for Ford and DigitalBridge
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between Ford and DigitalBridge is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and DigitalBridge Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DigitalBridge Group 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 DigitalBridge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DigitalBridge Group has no effect on the direction of Ford i.e., Ford and DigitalBridge go up and down completely randomly.
Pair Corralation between Ford and DigitalBridge
Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the DigitalBridge. In addition to that, Ford is 1.91 times more volatile than DigitalBridge Group. It trades about 0.0 of its total potential returns per unit of risk. DigitalBridge Group is currently generating about 0.08 per unit of volatility. If you would invest 1,775 in DigitalBridge Group on September 1, 2024 and sell it today you would earn a total of 647.00 from holding DigitalBridge Group or generate 36.45% 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. DigitalBridge Group
Performance |
| Timeline |
| Ford Motor |
| DigitalBridge Group |
Ford and DigitalBridge Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and DigitalBridge
The main advantage of trading using opposite Ford and DigitalBridge positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, DigitalBridge 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 DigitalBridge will offset losses from the drop in DigitalBridge's long position.The idea behind Ford Motor and DigitalBridge Group 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.| DigitalBridge vs. DigitalBridge Group | DigitalBridge vs. DigitalBridge Group | DigitalBridge vs. ACRES Commercial Realty | DigitalBridge vs. Chimera Investment |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
Other Complementary Tools
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets |