Correlation Between Ford and Mast Global
Can any of the company-specific risk be diversified away by investing in both Ford and Mast Global 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 Mast Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Mast Global Battery, you can compare the effects of market volatilities on Ford and Mast Global 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 Mast Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Mast Global.
Diversification Opportunities for Ford and Mast Global
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between Ford and Mast is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Mast Global Battery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mast Global Battery 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 Mast Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mast Global Battery has no effect on the direction of Ford i.e., Ford and Mast Global go up and down completely randomly.
Pair Corralation between Ford and Mast Global
Taking into account the 90-day investment horizon Ford Motor is expected to generate 1.35 times more return on investment than Mast Global. However, Ford is 1.35 times more volatile than Mast Global Battery. It trades about 0.17 of its potential returns per unit of risk. Mast Global Battery is currently generating about -0.03 per unit of risk. If you would invest 1,033 in Ford Motor on August 31, 2024 and sell it today you would earn a total of 77.00 from holding Ford Motor or generate 7.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ford Motor vs. Mast Global Battery
Performance |
| Timeline |
| Ford Motor |
| Mast Global Battery |
Ford and Mast Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Mast Global
The main advantage of trading using opposite Ford and Mast Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Mast Global 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 Mast Global will offset losses from the drop in Mast Global's long position.The idea behind Ford Motor and Mast Global Battery 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.| Mast Global vs. Freedom Day Dividend | Mast Global vs. iShares MSCI China | Mast Global vs. iShares Dividend and | Mast Global vs. SmartETFs Dividend Builder |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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