Correlation Between Ford and Healthy Choice
Can any of the company-specific risk be diversified away by investing in both Ford and Healthy Choice 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 Healthy Choice into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Healthy Choice Wellness, you can compare the effects of market volatilities on Ford and Healthy Choice 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 Healthy Choice. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Healthy Choice.
Diversification Opportunities for Ford and Healthy Choice
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Ford and Healthy is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Healthy Choice Wellness in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Healthy Choice Wellness 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 Healthy Choice. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Healthy Choice Wellness has no effect on the direction of Ford i.e., Ford and Healthy Choice go up and down completely randomly.
Pair Corralation between Ford and Healthy Choice
Taking into account the 90-day investment horizon Ford Motor is expected to generate 0.36 times more return on investment than Healthy Choice. However, Ford Motor is 2.81 times less risky than Healthy Choice. It trades about 0.25 of its potential returns per unit of risk. Healthy Choice Wellness is currently generating about 0.02 per unit of risk. If you would invest 1,008 in Ford Motor on September 2, 2024 and sell it today you would earn a total of 105.00 from holding Ford Motor or generate 10.42% 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. Healthy Choice Wellness
Performance |
| Timeline |
| Ford Motor |
| Healthy Choice Wellness |
Ford and Healthy Choice Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Healthy Choice
The main advantage of trading using opposite Ford and Healthy Choice positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Healthy Choice 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 Healthy Choice will offset losses from the drop in Healthy Choice's long position.The idea behind Ford Motor and Healthy Choice Wellness 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.| Healthy Choice vs. Highway Holdings Limited | Healthy Choice vs. Pintec Technology Holdings | Healthy Choice vs. Apogee Enterprises | Healthy Choice vs. Consol Energy |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
Other Complementary Tools
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities |