Correlation Between Ford and Catalyst/smh High
Can any of the company-specific risk be diversified away by investing in both Ford and Catalyst/smh High 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 Catalyst/smh High into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Catalystsmh High Income, you can compare the effects of market volatilities on Ford and Catalyst/smh High 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 Catalyst/smh High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Catalyst/smh High.
Diversification Opportunities for Ford and Catalyst/smh High
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Ford and Catalyst/smh is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Catalystsmh High Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Catalystsmh High Income 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 Catalyst/smh High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Catalystsmh High Income has no effect on the direction of Ford i.e., Ford and Catalyst/smh High go up and down completely randomly.
Pair Corralation between Ford and Catalyst/smh High
Taking into account the 90-day investment horizon Ford is expected to generate 1.85 times less return on investment than Catalyst/smh High. In addition to that, Ford is 7.28 times more volatile than Catalystsmh High Income. It trades about 0.01 of its total potential returns per unit of risk. Catalystsmh High Income is currently generating about 0.16 per unit of volatility. If you would invest 322.00 in Catalystsmh High Income on August 29, 2024 and sell it today you would earn a total of 54.00 from holding Catalystsmh High Income or generate 16.77% 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. Catalystsmh High Income
Performance |
| Timeline |
| Ford Motor |
| Catalystsmh High Income |
Ford and Catalyst/smh High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Catalyst/smh High
The main advantage of trading using opposite Ford and Catalyst/smh High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Catalyst/smh High 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 Catalyst/smh High will offset losses from the drop in Catalyst/smh High's long position.The idea behind Ford Motor and Catalystsmh High Income 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.| Catalyst/smh High vs. Prudential High Yield | Catalyst/smh High vs. HUMANA INC | Catalyst/smh High vs. Aquagold International | Catalyst/smh High vs. Barloworld Ltd ADR |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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