Correlation Between Ford and Ethema Health
Can any of the company-specific risk be diversified away by investing in both Ford and Ethema Health 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 Ethema Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Ethema Health Corp, you can compare the effects of market volatilities on Ford and Ethema Health 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 Ethema Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Ethema Health.
Diversification Opportunities for Ford and Ethema Health
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between Ford and Ethema is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Ethema Health Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ethema Health 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 Ethema Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ethema Health Corp has no effect on the direction of Ford i.e., Ford and Ethema Health go up and down completely randomly.
Pair Corralation between Ford and Ethema Health
Taking into account the 90-day investment horizon Ford is expected to generate 46.03 times less return on investment than Ethema Health. But when comparing it to its historical volatility, Ford Motor is 6.94 times less risky than Ethema Health. It trades about 0.01 of its potential returns per unit of risk. Ethema Health Corp is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 0.04 in Ethema Health Corp on August 30, 2024 and sell it today you would earn a total of 0.00 from holding Ethema Health Corp or generate 0.0% 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. Ethema Health Corp
Performance |
| Timeline |
| Ford Motor |
| Ethema Health Corp |
Ford and Ethema Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Ethema Health
The main advantage of trading using opposite Ford and Ethema Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Ethema Health 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 Ethema Health will offset losses from the drop in Ethema Health's long position.The idea behind Ford Motor and Ethema Health 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.| Ethema Health vs. PayPal Holdings | Ethema Health vs. Nasdaq Inc | Ethema Health vs. Choice Hotels International | Ethema Health vs. Microsoft |
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.
Other Complementary Tools
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing |