Correlation Between Ford and IA Clarington
Can any of the company-specific risk be diversified away by investing in both Ford and IA Clarington 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 IA Clarington into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and IA Clarington Loomis, you can compare the effects of market volatilities on Ford and IA Clarington 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 IA Clarington. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and IA Clarington.
Diversification Opportunities for Ford and IA Clarington
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Ford and IGAF is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and IA Clarington Loomis in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IA Clarington Loomis 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 IA Clarington. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IA Clarington Loomis has no effect on the direction of Ford i.e., Ford and IA Clarington go up and down completely randomly.
Pair Corralation between Ford and IA Clarington
Taking into account the 90-day investment horizon Ford is expected to generate 2.59 times less return on investment than IA Clarington. In addition to that, Ford is 3.33 times more volatile than IA Clarington Loomis. It trades about 0.01 of its total potential returns per unit of risk. IA Clarington Loomis is currently generating about 0.1 per unit of volatility. If you would invest 1,112 in IA Clarington Loomis on August 29, 2024 and sell it today you would earn a total of 443.00 from holding IA Clarington Loomis or generate 39.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Ford Motor vs. IA Clarington Loomis
Performance |
| Timeline |
| Ford Motor |
| IA Clarington Loomis |
Ford and IA Clarington Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and IA Clarington
The main advantage of trading using opposite Ford and IA Clarington positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, IA Clarington 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 IA Clarington will offset losses from the drop in IA Clarington's long position.The idea behind Ford Motor and IA Clarington Loomis 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.| IA Clarington vs. IA Clarington Core | IA Clarington vs. IA Clarington Floating | IA Clarington vs. IA Clarington Strategic | IA Clarington vs. Purpose Global Bond |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
Other Complementary Tools
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges |