Correlation Between Ford and Energem Corp
Can any of the company-specific risk be diversified away by investing in both Ford and Energem Corp 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 Energem Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Energem Corp, you can compare the effects of market volatilities on Ford and Energem Corp 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 Energem Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Energem Corp.
Diversification Opportunities for Ford and Energem Corp
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ford and Energem is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Energem Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Energem Corp 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 Energem Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Energem Corp has no effect on the direction of Ford i.e., Ford and Energem Corp go up and down completely randomly.
Pair Corralation between Ford and Energem Corp
Taking into account the 90-day investment horizon Ford Motor is expected to generate 0.09 times more return on investment than Energem Corp. However, Ford Motor is 10.71 times less risky than Energem Corp. It trades about 0.02 of its potential returns per unit of risk. Energem Corp is currently generating about -0.04 per unit of risk. If you would invest 1,095 in Ford Motor on August 28, 2024 and sell it today you would earn a total of 45.00 from holding Ford Motor or generate 4.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 15.31% |
| Values | Daily Returns |
Ford Motor vs. Energem Corp
Performance |
| Timeline |
| Ford Motor |
| Energem Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Ford and Energem Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Energem Corp
The main advantage of trading using opposite Ford and Energem Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Energem Corp 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 Energem Corp will offset losses from the drop in Energem Corp's long position.The idea behind Ford Motor and Energem Corp 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.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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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