Correlation Between Ford and Far East
Can any of the company-specific risk be diversified away by investing in both Ford and Far East 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 Far East into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Far East Wind, you can compare the effects of market volatilities on Ford and Far East 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 Far East. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Far East.
Diversification Opportunities for Ford and Far East
Pay attention - limited upside
The 3 months correlation between Ford and Far is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Far East Wind in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Far East Wind 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 Far East. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Far East Wind has no effect on the direction of Ford i.e., Ford and Far East go up and down completely randomly.
Pair Corralation between Ford and Far East
If you would invest 1,095 in Ford Motor on August 28, 2024 and sell it today you would earn a total of 45.00 from holding Ford Motor or generate 4.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 99.52% |
| Values | Daily Returns |
Ford Motor vs. Far East Wind
Performance |
| Timeline |
| Ford Motor |
| Far East Wind |
Ford and Far East Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Far East
The main advantage of trading using opposite Ford and Far East positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Far East 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 Far East will offset losses from the drop in Far East's long position.The idea behind Ford Motor and Far East Wind 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.| Far East vs. Kite Realty Group | Far East vs. Sea | Far East vs. HE Equipment Services | Far East vs. Tradeweb Markets |
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 Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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