Correlation Between Ford and ENDESA ADR
Can any of the company-specific risk be diversified away by investing in both Ford and ENDESA ADR 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 ENDESA ADR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and ENDESA ADR 12, you can compare the effects of market volatilities on Ford and ENDESA ADR 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 ENDESA ADR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and ENDESA ADR.
Diversification Opportunities for Ford and ENDESA ADR
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between Ford and ENDESA is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and ENDESA ADR 12 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ENDESA ADR 12 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 ENDESA ADR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ENDESA ADR 12 has no effect on the direction of Ford i.e., Ford and ENDESA ADR go up and down completely randomly.
Pair Corralation between Ford and ENDESA ADR
Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the ENDESA ADR. In addition to that, Ford is 1.39 times more volatile than ENDESA ADR 12. It trades about -0.19 of its total potential returns per unit of risk. ENDESA ADR 12 is currently generating about 0.25 per unit of volatility. If you would invest 925.00 in ENDESA ADR 12 on September 14, 2024 and sell it today you would earn a total of 60.00 from holding ENDESA ADR 12 or generate 6.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Ford Motor vs. ENDESA ADR 12
Performance |
| Timeline |
| Ford Motor |
| ENDESA ADR 12 |
Ford and ENDESA ADR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and ENDESA ADR
The main advantage of trading using opposite Ford and ENDESA ADR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, ENDESA ADR 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 ENDESA ADR will offset losses from the drop in ENDESA ADR's long position.The idea behind Ford Motor and ENDESA ADR 12 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.| ENDESA ADR vs. Duke Energy | ENDESA ADR vs. WEC Energy Group | ENDESA ADR vs. CMS Energy | ENDESA ADR vs. Terna Rete |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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