Correlation Between Ford and First Keystone
Can any of the company-specific risk be diversified away by investing in both Ford and First Keystone 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 First Keystone into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and First Keystone Corp, you can compare the effects of market volatilities on Ford and First Keystone 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 First Keystone. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and First Keystone.
Diversification Opportunities for Ford and First Keystone
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Ford and First is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and First Keystone Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Keystone 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 First Keystone. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Keystone Corp has no effect on the direction of Ford i.e., Ford and First Keystone go up and down completely randomly.
Pair Corralation between Ford and First Keystone
Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the First Keystone. But the stock apears to be less risky and, when comparing its historical volatility, Ford Motor is 1.06 times less risky than First Keystone. The stock trades about -0.01 of its potential returns per unit of risk. The First Keystone Corp is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1,243 in First Keystone Corp on August 29, 2024 and sell it today you would earn a total of 286.00 from holding First Keystone Corp or generate 23.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 97.6% |
| Values | Daily Returns |
Ford Motor vs. First Keystone Corp
Performance |
| Timeline |
| Ford Motor |
| First Keystone Corp |
Ford and First Keystone Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and First Keystone
The main advantage of trading using opposite Ford and First Keystone positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, First Keystone 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 First Keystone will offset losses from the drop in First Keystone's long position.The idea behind Ford Motor and First Keystone 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.| First Keystone vs. Invesco High Income | First Keystone vs. Blackrock Muniholdings Ny | First Keystone vs. MFS Investment Grade | First Keystone vs. Federated Premier Municipal |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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