Correlation Between Ford and AMCON Distributing
Can any of the company-specific risk be diversified away by investing in both Ford and AMCON Distributing 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 AMCON Distributing into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and AMCON Distributing, you can compare the effects of market volatilities on Ford and AMCON Distributing 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 AMCON Distributing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and AMCON Distributing.
Diversification Opportunities for Ford and AMCON Distributing
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between Ford and AMCON is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and AMCON Distributing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMCON Distributing 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 AMCON Distributing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AMCON Distributing has no effect on the direction of Ford i.e., Ford and AMCON Distributing go up and down completely randomly.
Pair Corralation between Ford and AMCON Distributing
Taking into account the 90-day investment horizon Ford Motor is expected to generate 0.53 times more return on investment than AMCON Distributing. However, Ford Motor is 1.89 times less risky than AMCON Distributing. It trades about 0.05 of its potential returns per unit of risk. AMCON Distributing is currently generating about -0.05 per unit of risk. If you would invest 1,091 in Ford Motor on August 24, 2024 and sell it today you would earn a total of 27.00 from holding Ford Motor or generate 2.47% 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. AMCON Distributing
Performance |
| Timeline |
| Ford Motor |
| AMCON Distributing |
Ford and AMCON Distributing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and AMCON Distributing
The main advantage of trading using opposite Ford and AMCON Distributing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, AMCON Distributing 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 AMCON Distributing will offset losses from the drop in AMCON Distributing's long position.The idea behind Ford Motor and AMCON Distributing 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.| AMCON Distributing vs. The Chefs Warehouse | AMCON Distributing vs. G Willi Food International | AMCON Distributing vs. SpartanNash Co | AMCON Distributing vs. Calavo Growers |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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