Correlation Between Ford and Ashmore Emerging
Can any of the company-specific risk be diversified away by investing in both Ford and Ashmore Emerging 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 Ashmore Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Ashmore Emerging Markets, you can compare the effects of market volatilities on Ford and Ashmore Emerging 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 Ashmore Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Ashmore Emerging.
Diversification Opportunities for Ford and Ashmore Emerging
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ford and ASHMORE is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Ashmore Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ashmore Emerging Markets 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 Ashmore Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ashmore Emerging Markets has no effect on the direction of Ford i.e., Ford and Ashmore Emerging go up and down completely randomly.
Pair Corralation between Ford and Ashmore Emerging
Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the Ashmore Emerging. In addition to that, Ford is 19.19 times more volatile than Ashmore Emerging Markets. It trades about 0.0 of its total potential returns per unit of risk. Ashmore Emerging Markets is currently generating about 0.19 per unit of volatility. If you would invest 811.00 in Ashmore Emerging Markets on August 31, 2024 and sell it today you would earn a total of 68.00 from holding Ashmore Emerging Markets or generate 8.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.73% |
| Values | Daily Returns |
Ford Motor vs. Ashmore Emerging Markets
Performance |
| Timeline |
| Ford Motor |
| Ashmore Emerging Markets |
Ford and Ashmore Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Ashmore Emerging
The main advantage of trading using opposite Ford and Ashmore Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Ashmore Emerging 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 Ashmore Emerging will offset losses from the drop in Ashmore Emerging's long position.The idea behind Ford Motor and Ashmore Emerging Markets 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.| Ashmore Emerging vs. Fidelity New Markets | Ashmore Emerging vs. Fidelity New Markets | Ashmore Emerging vs. Mfs Emerging Markets |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
Other Complementary Tools
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. |