Correlation Between Ford and International Media
Can any of the company-specific risk be diversified away by investing in both Ford and International Media 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 International Media into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and International Media Acquisition, you can compare the effects of market volatilities on Ford and International Media 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 International Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and International Media.
Diversification Opportunities for Ford and International Media
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between Ford and International is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and International Media Acquisitio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Media 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 International Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Media has no effect on the direction of Ford i.e., Ford and International Media go up and down completely randomly.
Pair Corralation between Ford and International Media
Taking into account the 90-day investment horizon Ford is expected to generate 216.35 times less return on investment than International Media. But when comparing it to its historical volatility, Ford Motor is 32.4 times less risky than International Media. It trades about 0.01 of its potential returns per unit of risk. International Media Acquisition is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 10.00 in International Media Acquisition on August 27, 2024 and sell it today you would lose (4.00) from holding International Media Acquisition or give up 40.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 45.49% |
| Values | Daily Returns |
Ford Motor vs. International Media Acquisitio
Performance |
| Timeline |
| Ford Motor |
| International Media |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Ford and International Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and International Media
The main advantage of trading using opposite Ford and International Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, International Media 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 International Media will offset losses from the drop in International Media's long position.The idea behind Ford Motor and International Media Acquisition 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.| International Media vs. Old Dominion Freight | International Media vs. CDW Corp | International Media vs. Verra Mobility Corp | International Media vs. Hooker Furniture |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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