Correlation Between Ford and Hashflow
Can any of the company-specific risk be diversified away by investing in both Ford and Hashflow 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 Hashflow into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Hashflow, you can compare the effects of market volatilities on Ford and Hashflow 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 Hashflow. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Hashflow.
Diversification Opportunities for Ford and Hashflow
Average diversification
The 3 months correlation between Ford and Hashflow is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Hashflow in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hashflow 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 Hashflow. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hashflow has no effect on the direction of Ford i.e., Ford and Hashflow go up and down completely randomly.
Pair Corralation between Ford and Hashflow
Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the Hashflow. But the stock apears to be less risky and, when comparing its historical volatility, Ford Motor is 2.58 times less risky than Hashflow. The stock trades about 0.0 of its potential returns per unit of risk. The Hashflow is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 15.00 in Hashflow on August 24, 2024 and sell it today you would earn a total of 5.00 from holding Hashflow or generate 33.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ford Motor vs. Hashflow
Performance |
| Timeline |
| Ford Motor |
| Hashflow |
Ford and Hashflow Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Hashflow
The main advantage of trading using opposite Ford and Hashflow positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Hashflow 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 Hashflow will offset losses from the drop in Hashflow's long position.The idea behind Ford Motor and Hashflow 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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