Correlation Between Ford and Exail Technologies
Can any of the company-specific risk be diversified away by investing in both Ford and Exail Technologies 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 Exail Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Exail Technologies SA, you can compare the effects of market volatilities on Ford and Exail Technologies 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 Exail Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Exail Technologies.
Diversification Opportunities for Ford and Exail Technologies
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Ford and Exail is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Exail Technologies SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Exail Technologies 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 Exail Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Exail Technologies has no effect on the direction of Ford i.e., Ford and Exail Technologies go up and down completely randomly.
Pair Corralation between Ford and Exail Technologies
Taking into account the 90-day investment horizon Ford is expected to generate 27.74 times less return on investment than Exail Technologies. But when comparing it to its historical volatility, Ford Motor is 1.17 times less risky than Exail Technologies. It trades about 0.01 of its potential returns per unit of risk. Exail Technologies SA is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 1,722 in Exail Technologies SA on October 25, 2024 and sell it today you would earn a total of 160.00 from holding Exail Technologies SA or generate 9.29% 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. Exail Technologies SA
Performance |
| Timeline |
| Ford Motor |
| Exail Technologies |
Ford and Exail Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Exail Technologies
The main advantage of trading using opposite Ford and Exail Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Exail Technologies 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 Exail Technologies will offset losses from the drop in Exail Technologies' long position.The idea behind Ford Motor and Exail Technologies SA 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.| Exail Technologies vs. Technip Energies BV | Exail Technologies vs. Netmedia Group SA | Exail Technologies vs. Jacquet Metal Service | Exail Technologies vs. Aures Technologies SA |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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