Correlation Between Ford and Elastron
Can any of the company-specific risk be diversified away by investing in both Ford and Elastron 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 Elastron into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Elastron SA , you can compare the effects of market volatilities on Ford and Elastron 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 Elastron. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Elastron.
Diversification Opportunities for Ford and Elastron
Good diversification
The 3 months correlation between Ford and Elastron is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Elastron SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elastron SA 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 Elastron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elastron SA has no effect on the direction of Ford i.e., Ford and Elastron go up and down completely randomly.
Pair Corralation between Ford and Elastron
Taking into account the 90-day investment horizon Ford Motor is expected to generate 1.11 times more return on investment than Elastron. However, Ford is 1.11 times more volatile than Elastron SA . It trades about 0.0 of its potential returns per unit of risk. Elastron SA is currently generating about -0.05 per unit of risk. If you would invest 1,251 in Ford Motor on September 1, 2024 and sell it today you would lose (138.00) from holding Ford Motor or give up 11.03% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ford Motor vs. Elastron SA
Performance |
| Timeline |
| Ford Motor |
| Elastron SA |
Ford and Elastron Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Elastron
The main advantage of trading using opposite Ford and Elastron positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Elastron 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 Elastron will offset losses from the drop in Elastron's long position.The idea behind Ford Motor and Elastron 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.| Elastron vs. Thrace Plastics Holding | Elastron vs. GEK TERNA Holdings | Elastron vs. Motor Oil Corinth | Elastron vs. Hellenic Petroleum SA |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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