Correlation Between Ford and Edgewell Personal
Can any of the company-specific risk be diversified away by investing in both Ford and Edgewell Personal 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 Edgewell Personal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Edgewell Personal Care, you can compare the effects of market volatilities on Ford and Edgewell Personal 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 Edgewell Personal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Edgewell Personal.
Diversification Opportunities for Ford and Edgewell Personal
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Ford and Edgewell is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Edgewell Personal Care in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Edgewell Personal Care 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 Edgewell Personal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Edgewell Personal Care has no effect on the direction of Ford i.e., Ford and Edgewell Personal go up and down completely randomly.
Pair Corralation between Ford and Edgewell Personal
Taking into account the 90-day investment horizon Ford is expected to generate 1.87 times less return on investment than Edgewell Personal. In addition to that, Ford is 1.86 times more volatile than Edgewell Personal Care. It trades about 0.04 of its total potential returns per unit of risk. Edgewell Personal Care is currently generating about 0.14 per unit of volatility. If you would invest 3,523 in Edgewell Personal Care on August 28, 2024 and sell it today you would earn a total of 151.00 from holding Edgewell Personal Care or generate 4.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ford Motor vs. Edgewell Personal Care
Performance |
| Timeline |
| Ford Motor |
| Edgewell Personal Care |
Ford and Edgewell Personal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Edgewell Personal
The main advantage of trading using opposite Ford and Edgewell Personal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Edgewell Personal 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 Edgewell Personal will offset losses from the drop in Edgewell Personal's long position.The idea behind Ford Motor and Edgewell Personal Care 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.| Edgewell Personal vs. Mannatech Incorporated | Edgewell Personal vs. Inter Parfums | Edgewell Personal vs. Nu Skin Enterprises | Edgewell Personal vs. Helen of Troy |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
Other Complementary Tools
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets |