Correlation Between Ford and Fidelity Series
Can any of the company-specific risk be diversified away by investing in both Ford and Fidelity Series 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 Fidelity Series into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Fidelity Series Blue, you can compare the effects of market volatilities on Ford and Fidelity Series 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 Fidelity Series. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Fidelity Series.
Diversification Opportunities for Ford and Fidelity Series
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Ford and FIDELITY is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Fidelity Series Blue in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Series Blue 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 Fidelity Series. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Series Blue has no effect on the direction of Ford i.e., Ford and Fidelity Series go up and down completely randomly.
Pair Corralation between Ford and Fidelity Series
Taking into account the 90-day investment horizon Ford is expected to generate 6.91 times less return on investment than Fidelity Series. In addition to that, Ford is 1.87 times more volatile than Fidelity Series Blue. It trades about 0.01 of its total potential returns per unit of risk. Fidelity Series Blue is currently generating about 0.13 per unit of volatility. If you would invest 937.00 in Fidelity Series Blue on September 5, 2024 and sell it today you would earn a total of 1,065 from holding Fidelity Series Blue or generate 113.66% 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. Fidelity Series Blue
Performance |
| Timeline |
| Ford Motor |
| Fidelity Series Blue |
Ford and Fidelity Series Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Fidelity Series
The main advantage of trading using opposite Ford and Fidelity Series positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Fidelity Series 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 Fidelity Series will offset losses from the drop in Fidelity Series' long position.The idea behind Ford Motor and Fidelity Series Blue 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.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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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