Correlation Between Ford and EMERGENT BIOSOLUT
Can any of the company-specific risk be diversified away by investing in both Ford and EMERGENT BIOSOLUT 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 EMERGENT BIOSOLUT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and EMERGENT BIOSOLUT, you can compare the effects of market volatilities on Ford and EMERGENT BIOSOLUT 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 EMERGENT BIOSOLUT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and EMERGENT BIOSOLUT.
Diversification Opportunities for Ford and EMERGENT BIOSOLUT
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Ford and EMERGENT is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and EMERGENT BIOSOLUT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EMERGENT BIOSOLUT 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 EMERGENT BIOSOLUT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EMERGENT BIOSOLUT has no effect on the direction of Ford i.e., Ford and EMERGENT BIOSOLUT go up and down completely randomly.
Pair Corralation between Ford and EMERGENT BIOSOLUT
Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the EMERGENT BIOSOLUT. But the stock apears to be less risky and, when comparing its historical volatility, Ford Motor is 3.81 times less risky than EMERGENT BIOSOLUT. The stock trades about 0.0 of its potential returns per unit of risk. The EMERGENT BIOSOLUT is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 602.00 in EMERGENT BIOSOLUT on September 3, 2024 and sell it today you would earn a total of 347.00 from holding EMERGENT BIOSOLUT or generate 57.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 96.9% |
| Values | Daily Returns |
Ford Motor vs. EMERGENT BIOSOLUT
Performance |
| Timeline |
| Ford Motor |
| EMERGENT BIOSOLUT |
Ford and EMERGENT BIOSOLUT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and EMERGENT BIOSOLUT
The main advantage of trading using opposite Ford and EMERGENT BIOSOLUT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, EMERGENT BIOSOLUT 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 EMERGENT BIOSOLUT will offset losses from the drop in EMERGENT BIOSOLUT's long position.| Ford vs. GreenPower Motor | Ford vs. ZEEKR Intelligent Technology | Ford vs. Volcon Inc | Ford vs. Ford Motor |
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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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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