Correlation Between Ford and Intel Corp
Can any of the company-specific risk be diversified away by investing in both Ford and Intel Corp 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 Intel Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Intel Corp CEDEAR, you can compare the effects of market volatilities on Ford and Intel Corp 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 Intel Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Intel Corp.
Diversification Opportunities for Ford and Intel Corp
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Ford and Intel is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Intel Corp CEDEAR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intel Corp CEDEAR 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 Intel Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intel Corp CEDEAR has no effect on the direction of Ford i.e., Ford and Intel Corp go up and down completely randomly.
Pair Corralation between Ford and Intel Corp
Taking into account the 90-day investment horizon Ford Motor is expected to generate 0.57 times more return on investment than Intel Corp. However, Ford Motor is 1.77 times less risky than Intel Corp. It trades about 0.02 of its potential returns per unit of risk. Intel Corp CEDEAR is currently generating about -0.03 per unit of risk. If you would invest 1,035 in Ford Motor on September 4, 2024 and sell it today you would earn a total of 63.00 from holding Ford Motor or generate 6.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 97.97% |
| Values | Daily Returns |
Ford Motor vs. Intel Corp CEDEAR
Performance |
| Timeline |
| Ford Motor |
| Intel Corp CEDEAR |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Weak
Ford and Intel Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Intel Corp
The main advantage of trading using opposite Ford and Intel Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Intel Corp 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 Intel Corp will offset losses from the drop in Intel Corp's long position.The idea behind Ford Motor and Intel Corp CEDEAR 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.| Intel Corp vs. United States Steel | Intel Corp vs. Harmony Gold Mining | Intel Corp vs. Telecom Argentina | Intel Corp vs. Compania de Transporte |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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