Correlation Between Ford and Fisher Investments
Can any of the company-specific risk be diversified away by investing in both Ford and Fisher Investments 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 Fisher Investments into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Fisher Large Cap, you can compare the effects of market volatilities on Ford and Fisher Investments 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 Fisher Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Fisher Investments.
Diversification Opportunities for Ford and Fisher Investments
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Ford and Fisher is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Fisher Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fisher Investments 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 Fisher Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fisher Investments has no effect on the direction of Ford i.e., Ford and Fisher Investments go up and down completely randomly.
Pair Corralation between Ford and Fisher Investments
Taking into account the 90-day investment horizon Ford Motor is expected to generate 2.01 times more return on investment than Fisher Investments. However, Ford is 2.01 times more volatile than Fisher Large Cap. It trades about 0.18 of its potential returns per unit of risk. Fisher Large Cap is currently generating about 0.19 per unit of risk. If you would invest 1,033 in Ford Motor on August 31, 2024 and sell it today you would earn a total of 80.00 from holding Ford Motor or generate 7.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Ford Motor vs. Fisher Large Cap
Performance |
| Timeline |
| Ford Motor |
| Fisher Investments |
Ford and Fisher Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Fisher Investments
The main advantage of trading using opposite Ford and Fisher Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Fisher Investments 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 Fisher Investments will offset losses from the drop in Fisher Investments' long position.The idea behind Ford Motor and Fisher Large Cap 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.| Fisher Investments vs. Aqr Long Short Equity | Fisher Investments vs. Barings Active Short | Fisher Investments vs. Touchstone Ultra Short | Fisher Investments vs. Old Westbury Short Term |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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