Correlation Between Ford and Fernhill Corp
Can any of the company-specific risk be diversified away by investing in both Ford and Fernhill Corp 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 Fernhill Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Fernhill Corp, you can compare the effects of market volatilities on Ford and Fernhill Corp 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 Fernhill Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Fernhill Corp.
Diversification Opportunities for Ford and Fernhill Corp
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between Ford and Fernhill is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Fernhill Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fernhill Corp 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 Fernhill Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fernhill Corp has no effect on the direction of Ford i.e., Ford and Fernhill Corp go up and down completely randomly.
Pair Corralation between Ford and Fernhill Corp
Taking into account the 90-day investment horizon Ford Motor is expected to generate 0.12 times more return on investment than Fernhill Corp. However, Ford Motor is 8.64 times less risky than Fernhill Corp. It trades about 0.06 of its potential returns per unit of risk. Fernhill Corp is currently generating about -0.08 per unit of risk. If you would invest 992.00 in Ford Motor on November 5, 2024 and sell it today you would earn a total of 16.00 from holding Ford Motor or generate 1.61% 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. Fernhill Corp
Performance |
| Timeline |
| Ford Motor |
| Fernhill Corp |
Ford and Fernhill Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Fernhill Corp
The main advantage of trading using opposite Ford and Fernhill Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Fernhill Corp 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 Fernhill Corp will offset losses from the drop in Fernhill Corp's long position.The idea behind Ford Motor and Fernhill Corp 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.| Fernhill Corp vs. Protek Capital | Fernhill Corp vs. On4 Communications | Fernhill Corp vs. Bowmo Inc | Fernhill Corp vs. BHPA Inc |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
Other Complementary Tools
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years |