Correlation Between Ford and Enstar Group
Can any of the company-specific risk be diversified away by investing in both Ford and Enstar Group 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 Enstar Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Enstar Group Limited, you can compare the effects of market volatilities on Ford and Enstar Group 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 Enstar Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Enstar Group.
Diversification Opportunities for Ford and Enstar Group
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Ford and Enstar is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Enstar Group Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enstar Group Limited 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 Enstar Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enstar Group Limited has no effect on the direction of Ford i.e., Ford and Enstar Group go up and down completely randomly.
Pair Corralation between Ford and Enstar Group
Taking into account the 90-day investment horizon Ford Motor is expected to generate 2.08 times more return on investment than Enstar Group. However, Ford is 2.08 times more volatile than Enstar Group Limited. It trades about 0.25 of its potential returns per unit of risk. Enstar Group Limited is currently generating about -0.02 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 Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ford Motor vs. Enstar Group Limited
Performance |
| Timeline |
| Ford Motor |
| Enstar Group Limited |
Ford and Enstar Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Enstar Group
The main advantage of trading using opposite Ford and Enstar Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Enstar Group 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 Enstar Group will offset losses from the drop in Enstar Group's long position.The idea behind Ford Motor and Enstar Group Limited 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.| Enstar Group vs. Athene Holding | Enstar Group vs. The Hartford Financial | Enstar Group vs. Arch Capital Group | Enstar Group vs. Athene Holding |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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