Correlation Between Ford and Equinix
Can any of the company-specific risk be diversified away by investing in both Ford and Equinix 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 Equinix into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Equinix, you can compare the effects of market volatilities on Ford and Equinix 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 Equinix. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Equinix.
Diversification Opportunities for Ford and Equinix
Very weak diversification
The 3 months correlation between Ford and Equinix is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Equinix in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Equinix 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 Equinix. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Equinix has no effect on the direction of Ford i.e., Ford and Equinix go up and down completely randomly.
Pair Corralation between Ford and Equinix
Taking into account the 90-day investment horizon Ford is expected to generate 4.35 times less return on investment than Equinix. In addition to that, Ford is 1.46 times more volatile than Equinix. It trades about 0.01 of its total potential returns per unit of risk. Equinix is currently generating about 0.06 per unit of volatility. If you would invest 63,377 in Equinix on September 3, 2024 and sell it today you would earn a total of 30,643 from holding Equinix or generate 48.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 98.02% |
| Values | Daily Returns |
Ford Motor vs. Equinix
Performance |
| Timeline |
| Ford Motor |
| Equinix |
Ford and Equinix Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Equinix
The main advantage of trading using opposite Ford and Equinix positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Equinix 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 Equinix will offset losses from the drop in Equinix's long position.| Ford vs. GreenPower Motor | Ford vs. ZEEKR Intelligent Technology | Ford vs. Volcon Inc | Ford vs. Ford Motor |
| Equinix vs. Sunstone Hotel Investors | Equinix vs. HYATT HOTELS A | Equinix vs. Dalata Hotel Group | Equinix vs. Taiwan Semiconductor Manufacturing |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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