Correlation Between Ford and Five Point
Can any of the company-specific risk be diversified away by investing in both Ford and Five Point 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 Five Point into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Five Point Holdings, you can compare the effects of market volatilities on Ford and Five Point 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 Five Point. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Five Point.
Diversification Opportunities for Ford and Five Point
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between Ford and Five is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Five Point Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Five Point Holdings 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 Five Point. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Five Point Holdings has no effect on the direction of Ford i.e., Ford and Five Point go up and down completely randomly.
Pair Corralation between Ford and Five Point
Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the Five Point. In addition to that, Ford is 1.12 times more volatile than Five Point Holdings. It trades about 0.0 of its total potential returns per unit of risk. Five Point Holdings is currently generating about 0.04 per unit of volatility. If you would invest 390.00 in Five Point Holdings on August 24, 2024 and sell it today you would earn a total of 6.00 from holding Five Point Holdings or generate 1.54% 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. Five Point Holdings
Performance |
| Timeline |
| Ford Motor |
| Five Point Holdings |
Ford and Five Point Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Five Point
The main advantage of trading using opposite Ford and Five Point positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Five Point 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 Five Point will offset losses from the drop in Five Point's long position.The idea behind Ford Motor and Five Point Holdings 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.| Five Point vs. Landsea Homes Corp | Five Point vs. AMREP | Five Point vs. American Realty Investors | Five Point vs. Forestar Group |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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