Correlation Between Ford and IB Acquisition
Can any of the company-specific risk be diversified away by investing in both Ford and IB Acquisition 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 IB Acquisition into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and IB Acquisition Corp, you can compare the effects of market volatilities on Ford and IB Acquisition 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 IB Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and IB Acquisition.
Diversification Opportunities for Ford and IB Acquisition
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Ford and IBACR is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and IB Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IB Acquisition 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 IB Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IB Acquisition Corp has no effect on the direction of Ford i.e., Ford and IB Acquisition go up and down completely randomly.
Pair Corralation between Ford and IB Acquisition
Taking into account the 90-day investment horizon Ford Motor is expected to generate 0.1 times more return on investment than IB Acquisition. However, Ford Motor is 10.31 times less risky than IB Acquisition. It trades about -0.18 of its potential returns per unit of risk. IB Acquisition Corp is currently generating about -0.06 per unit of risk. If you would invest 1,110 in Ford Motor on September 13, 2024 and sell it today you would lose (70.00) from holding Ford Motor or give up 6.31% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 86.36% |
| Values | Daily Returns |
Ford Motor vs. IB Acquisition Corp
Performance |
| Timeline |
| Ford Motor |
| IB Acquisition Corp |
Ford and IB Acquisition Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and IB Acquisition
The main advantage of trading using opposite Ford and IB Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, IB Acquisition 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 IB Acquisition will offset losses from the drop in IB Acquisition's long position.The idea behind Ford Motor and IB Acquisition 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.| IB Acquisition vs. JD Sports Fashion | IB Acquisition vs. Saia Inc | IB Acquisition vs. Mesa Air Group | IB Acquisition vs. Lindblad Expeditions Holdings |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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