Correlation Between Ford and Pro Blend
Can any of the company-specific risk be diversified away by investing in both Ford and Pro Blend 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 Pro Blend into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Pro Blend Moderate Term, you can compare the effects of market volatilities on Ford and Pro Blend 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 Pro Blend. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Pro Blend.
Diversification Opportunities for Ford and Pro Blend
Good diversification
The 3 months correlation between Ford and Pro is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Pro Blend Moderate Term in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pro Blend Moderate 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 Pro Blend. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pro Blend Moderate has no effect on the direction of Ford i.e., Ford and Pro Blend go up and down completely randomly.
Pair Corralation between Ford and Pro Blend
Taking into account the 90-day investment horizon Ford Motor is expected to generate 6.85 times more return on investment than Pro Blend. However, Ford is 6.85 times more volatile than Pro Blend Moderate Term. It trades about 0.04 of its potential returns per unit of risk. Pro Blend Moderate Term is currently generating about 0.07 per unit of risk. If you would invest 1,122 in Ford Motor on August 27, 2024 and sell it today you would earn a total of 18.00 from holding Ford Motor or generate 1.6% 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. Pro Blend Moderate Term
Performance |
| Timeline |
| Ford Motor |
| Pro Blend Moderate |
Ford and Pro Blend Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Pro Blend
The main advantage of trading using opposite Ford and Pro Blend positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Pro Blend 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 Pro Blend will offset losses from the drop in Pro Blend's long position.The idea behind Ford Motor and Pro Blend Moderate Term 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.| Pro Blend vs. Manning Napier Callodine | Pro Blend vs. Manning Napier Callodine | Pro Blend vs. Manning Napier Callodine | Pro Blend vs. Pro Blend Extended Term |
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 Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
Other Complementary Tools
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios |