Correlation Between Ford and Ivy Apollo
Can any of the company-specific risk be diversified away by investing in both Ford and Ivy Apollo 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 Ivy Apollo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Ivy Apollo Multi Asset, you can compare the effects of market volatilities on Ford and Ivy Apollo 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 Ivy Apollo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Ivy Apollo.
Diversification Opportunities for Ford and Ivy Apollo
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ford and Ivy is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Ivy Apollo Multi Asset in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ivy Apollo Multi 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 Ivy Apollo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ivy Apollo Multi has no effect on the direction of Ford i.e., Ford and Ivy Apollo go up and down completely randomly.
Pair Corralation between Ford and Ivy Apollo
Taking into account the 90-day investment horizon Ford Motor is expected to generate 4.49 times more return on investment than Ivy Apollo. However, Ford is 4.49 times more volatile than Ivy Apollo Multi Asset. It trades about 0.04 of its potential returns per unit of risk. Ivy Apollo Multi Asset is currently generating about 0.11 per unit of risk. If you would invest 911.00 in Ford Motor on August 26, 2024 and sell it today you would earn a total of 207.00 from holding Ford Motor or generate 22.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ford Motor vs. Ivy Apollo Multi Asset
Performance |
| Timeline |
| Ford Motor |
| Ivy Apollo Multi |
Ford and Ivy Apollo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Ivy Apollo
The main advantage of trading using opposite Ford and Ivy Apollo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Ivy Apollo 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 Ivy Apollo will offset losses from the drop in Ivy Apollo's long position.The idea behind Ford Motor and Ivy Apollo Multi Asset 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.| Ivy Apollo vs. Ivy Large Cap | Ivy Apollo vs. Ivy Small Cap | Ivy Apollo vs. Ivy High Income | Ivy Apollo vs. Ivy Apollo Multi Asset |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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