Correlation Between Ford and Eurofins Scientific
Can any of the company-specific risk be diversified away by investing in both Ford and Eurofins Scientific 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 Eurofins Scientific into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Eurofins Scientific SE, you can compare the effects of market volatilities on Ford and Eurofins Scientific 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 Eurofins Scientific. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Eurofins Scientific.
Diversification Opportunities for Ford and Eurofins Scientific
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ford and Eurofins is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Eurofins Scientific SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eurofins Scientific 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 Eurofins Scientific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eurofins Scientific has no effect on the direction of Ford i.e., Ford and Eurofins Scientific go up and down completely randomly.
Pair Corralation between Ford and Eurofins Scientific
Taking into account the 90-day investment horizon Ford Motor is expected to generate 0.6 times more return on investment than Eurofins Scientific. However, Ford Motor is 1.66 times less risky than Eurofins Scientific. It trades about 0.25 of its potential returns per unit of risk. Eurofins Scientific SE is currently generating about -0.07 per unit of risk. If you would invest 1,008 in Ford Motor on September 2, 2024 and sell it today you would earn a total of 105.00 from holding Ford Motor or generate 10.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ford Motor vs. Eurofins Scientific SE
Performance |
| Timeline |
| Ford Motor |
| Eurofins Scientific |
Ford and Eurofins Scientific Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Eurofins Scientific
The main advantage of trading using opposite Ford and Eurofins Scientific positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Eurofins Scientific 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 Eurofins Scientific will offset losses from the drop in Eurofins Scientific's long position.The idea behind Ford Motor and Eurofins Scientific SE 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.| Eurofins Scientific vs. Thermo Fisher Scientific | Eurofins Scientific vs. Illumina | Eurofins Scientific vs. Danaher | Eurofins Scientific vs. Waters |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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