Correlation Between Ford and Marblegate Acquisition
Can any of the company-specific risk be diversified away by investing in both Ford and Marblegate Acquisition 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 Marblegate Acquisition into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Marblegate Acquisition Corp, you can compare the effects of market volatilities on Ford and Marblegate Acquisition 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 Marblegate Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Marblegate Acquisition.
Diversification Opportunities for Ford and Marblegate Acquisition
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Ford and Marblegate is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Marblegate Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marblegate 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 Marblegate Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marblegate Acquisition has no effect on the direction of Ford i.e., Ford and Marblegate Acquisition go up and down completely randomly.
Pair Corralation between Ford and Marblegate Acquisition
Taking into account the 90-day investment horizon Ford is expected to generate 58.15 times less return on investment than Marblegate Acquisition. But when comparing it to its historical volatility, Ford Motor is 9.74 times less risky than Marblegate Acquisition. It trades about 0.01 of its potential returns per unit of risk. Marblegate Acquisition Corp is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 3.80 in Marblegate Acquisition Corp on August 30, 2024 and sell it today you would lose (0.60) from holding Marblegate Acquisition Corp or give up 15.79% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ford Motor vs. Marblegate Acquisition Corp
Performance |
| Timeline |
| Ford Motor |
| Marblegate Acquisition |
Ford and Marblegate Acquisition Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Marblegate Acquisition
The main advantage of trading using opposite Ford and Marblegate Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Marblegate Acquisition 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 Marblegate Acquisition will offset losses from the drop in Marblegate Acquisition's long position.The idea behind Ford Motor and Marblegate Acquisition 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.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 Stocks Directory module to find actively traded stocks across global markets.
Other Complementary Tools
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk |