Correlation Between Ford and Elite Education
Can any of the company-specific risk be diversified away by investing in both Ford and Elite Education 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 Elite Education into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Elite Education Group, you can compare the effects of market volatilities on Ford and Elite Education 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 Elite Education. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Elite Education.
Diversification Opportunities for Ford and Elite Education
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ford and Elite is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Elite Education Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elite Education 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 Elite Education. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elite Education Group has no effect on the direction of Ford i.e., Ford and Elite Education go up and down completely randomly.
Pair Corralation between Ford and Elite Education
Taking into account the 90-day investment horizon Ford is expected to generate 12.7 times less return on investment than Elite Education. But when comparing it to its historical volatility, Ford Motor is 3.68 times less risky than Elite Education. It trades about 0.01 of its potential returns per unit of risk. Elite Education Group is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 217.00 in Elite Education Group on October 20, 2024 and sell it today you would lose (116.00) from holding Elite Education Group or give up 53.46% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 98.79% |
| Values | Daily Returns |
Ford Motor vs. Elite Education Group
Performance |
| Timeline |
| Ford Motor |
| Elite Education Group |
Ford and Elite Education Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Elite Education
The main advantage of trading using opposite Ford and Elite Education positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Elite Education 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 Elite Education will offset losses from the drop in Elite Education's long position.The idea behind Ford Motor and Elite Education 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.| Elite Education vs. Golden Sun Education | Elite Education vs. Jianzhi Education Technology | Elite Education vs. Genius Group | Elite Education vs. Lixiang Education Holding |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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