Correlation Between Ford and Dexxos Participaes
Can any of the company-specific risk be diversified away by investing in both Ford and Dexxos Participaes 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 Dexxos Participaes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Dexxos Participaes SA, you can compare the effects of market volatilities on Ford and Dexxos Participaes 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 Dexxos Participaes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Dexxos Participaes.
Diversification Opportunities for Ford and Dexxos Participaes
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ford and Dexxos is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Dexxos Participaes SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dexxos Participaes 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 Dexxos Participaes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dexxos Participaes has no effect on the direction of Ford i.e., Ford and Dexxos Participaes go up and down completely randomly.
Pair Corralation between Ford and Dexxos Participaes
Taking into account the 90-day investment horizon Ford Motor is expected to generate 1.41 times more return on investment than Dexxos Participaes. However, Ford is 1.41 times more volatile than Dexxos Participaes SA. It trades about 0.0 of its potential returns per unit of risk. Dexxos Participaes SA is currently generating about -0.09 per unit of risk. If you would invest 1,169 in Ford Motor on September 2, 2024 and sell it today you would lose (56.00) from holding Ford Motor or give up 4.79% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.44% |
| Values | Daily Returns |
Ford Motor vs. Dexxos Participaes SA
Performance |
| Timeline |
| Ford Motor |
| Dexxos Participaes |
Ford and Dexxos Participaes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Dexxos Participaes
The main advantage of trading using opposite Ford and Dexxos Participaes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Dexxos Participaes 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 Dexxos Participaes will offset losses from the drop in Dexxos Participaes' long position.The idea behind Ford Motor and Dexxos Participaes SA 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.| Dexxos Participaes vs. Taurus Armas SA | Dexxos Participaes vs. Cia de Ferro | Dexxos Participaes vs. Irani Papel e | Dexxos Participaes vs. Ambipar Participaes e |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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