Correlation Between Ford and FTAC Emerald
Can any of the company-specific risk be diversified away by investing in both Ford and FTAC Emerald 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 FTAC Emerald into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and FTAC Emerald Acquisition, you can compare the effects of market volatilities on Ford and FTAC Emerald 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 FTAC Emerald. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and FTAC Emerald.
Diversification Opportunities for Ford and FTAC Emerald
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Ford and FTAC is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and FTAC Emerald Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FTAC Emerald Acquisition 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 FTAC Emerald. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FTAC Emerald Acquisition has no effect on the direction of Ford i.e., Ford and FTAC Emerald go up and down completely randomly.
Pair Corralation between Ford and FTAC Emerald
Taking into account the 90-day investment horizon Ford is expected to generate 19.41 times less return on investment than FTAC Emerald. But when comparing it to its historical volatility, Ford Motor is 13.56 times less risky than FTAC Emerald. It trades about 0.23 of its potential returns per unit of risk. FTAC Emerald Acquisition is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest 18.00 in FTAC Emerald Acquisition on September 1, 2024 and sell it today you would earn a total of 52.00 from holding FTAC Emerald Acquisition or generate 288.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ford Motor vs. FTAC Emerald Acquisition
Performance |
| Timeline |
| Ford Motor |
| FTAC Emerald Acquisition |
Ford and FTAC Emerald Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and FTAC Emerald
The main advantage of trading using opposite Ford and FTAC Emerald positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, FTAC Emerald 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 FTAC Emerald will offset losses from the drop in FTAC Emerald's long position.The idea behind Ford Motor and FTAC Emerald Acquisition 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.| FTAC Emerald vs. ServiceNow | FTAC Emerald vs. CECO Environmental Corp | FTAC Emerald vs. Tianjin Capital Environmental | FTAC Emerald vs. Allegheny Technologies Incorporated |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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