Correlation Between Ford and Element Fleet
Can any of the company-specific risk be diversified away by investing in both Ford and Element Fleet 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 Element Fleet into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Element Fleet Management, you can compare the effects of market volatilities on Ford and Element Fleet 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 Element Fleet. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Element Fleet.
Diversification Opportunities for Ford and Element Fleet
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Ford and Element is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Element Fleet Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Element Fleet Management 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 Element Fleet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Element Fleet Management has no effect on the direction of Ford i.e., Ford and Element Fleet go up and down completely randomly.
Pair Corralation between Ford and Element Fleet
Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the Element Fleet. In addition to that, Ford is 1.83 times more volatile than Element Fleet Management. It trades about 0.0 of its total potential returns per unit of risk. Element Fleet Management is currently generating about 0.1 per unit of volatility. If you would invest 1,949 in Element Fleet Management on August 31, 2024 and sell it today you would earn a total of 1,021 from holding Element Fleet Management or generate 52.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.73% |
| Values | Daily Returns |
Ford Motor vs. Element Fleet Management
Performance |
| Timeline |
| Ford Motor |
| Element Fleet Management |
Ford and Element Fleet Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Element Fleet
The main advantage of trading using opposite Ford and Element Fleet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Element Fleet 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 Element Fleet will offset losses from the drop in Element Fleet's long position.The idea behind Ford Motor and Element Fleet Management 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.| Element Fleet vs. Baylin Technologies | Element Fleet vs. Supremex | Element Fleet vs. iShares Canadian HYBrid | Element Fleet vs. Brompton European Dividend |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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