Correlation Between Ford and Highland Merger
Can any of the company-specific risk be diversified away by investing in both Ford and Highland Merger 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 Highland Merger into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Highland Merger Arbitrage, you can compare the effects of market volatilities on Ford and Highland Merger 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 Highland Merger. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Highland Merger.
Diversification Opportunities for Ford and Highland Merger
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between Ford and Highland is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Highland Merger Arbitrage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Highland Merger Arbitrage 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 Highland Merger. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Highland Merger Arbitrage has no effect on the direction of Ford i.e., Ford and Highland Merger go up and down completely randomly.
Pair Corralation between Ford and Highland Merger
Taking into account the 90-day investment horizon Ford is expected to generate 1.17 times less return on investment than Highland Merger. In addition to that, Ford is 17.71 times more volatile than Highland Merger Arbitrage. It trades about 0.01 of its total potential returns per unit of risk. Highland Merger Arbitrage is currently generating about 0.18 per unit of volatility. If you would invest 1,854 in Highland Merger Arbitrage on August 29, 2024 and sell it today you would earn a total of 94.00 from holding Highland Merger Arbitrage or generate 5.07% 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. Highland Merger Arbitrage
Performance |
| Timeline |
| Ford Motor |
| Highland Merger Arbitrage |
Ford and Highland Merger Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Highland Merger
The main advantage of trading using opposite Ford and Highland Merger positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Highland Merger 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 Highland Merger will offset losses from the drop in Highland Merger's long position.The idea behind Ford Motor and Highland Merger Arbitrage 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.| Highland Merger vs. Rationalpier 88 Convertible | Highland Merger vs. Ab Global Bond | Highland Merger vs. Calamos Dynamic Convertible | Highland Merger vs. California Bond Fund |
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 CEOs Directory module to screen CEOs from public companies around the world.
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