Correlation Between Ford and Ubs Emerging
Can any of the company-specific risk be diversified away by investing in both Ford and Ubs Emerging 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 Ubs Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Ubs Emerging Markets, you can compare the effects of market volatilities on Ford and Ubs Emerging 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 Ubs Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Ubs Emerging.
Diversification Opportunities for Ford and Ubs Emerging
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between Ford and Ubs is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Ubs Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ubs Emerging Markets 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 Ubs Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ubs Emerging Markets has no effect on the direction of Ford i.e., Ford and Ubs Emerging go up and down completely randomly.
Pair Corralation between Ford and Ubs Emerging
Taking into account the 90-day investment horizon Ford Motor is expected to generate 2.33 times more return on investment than Ubs Emerging. However, Ford is 2.33 times more volatile than Ubs Emerging Markets. It trades about 0.19 of its potential returns per unit of risk. Ubs Emerging Markets is currently generating about -0.27 per unit of risk. If you would invest 1,027 in Ford Motor on August 30, 2024 and sell it today you would earn a total of 83.00 from holding Ford Motor or generate 8.08% 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. Ubs Emerging Markets
Performance |
| Timeline |
| Ford Motor |
| Ubs Emerging Markets |
Ford and Ubs Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Ubs Emerging
The main advantage of trading using opposite Ford and Ubs Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Ubs Emerging 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 Ubs Emerging will offset losses from the drop in Ubs Emerging's long position.The idea behind Ford Motor and Ubs Emerging Markets 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.| Ubs Emerging vs. Goldman Sachs Mlp | Ubs Emerging vs. Oil Gas Ultrasector | Ubs Emerging vs. Energy Services Fund | Ubs Emerging vs. Hennessy Bp Energy |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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