Correlation Between Ford and Impresa Sociedade
Can any of the company-specific risk be diversified away by investing in both Ford and Impresa Sociedade 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 Impresa Sociedade into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Impresa Sociedade, you can compare the effects of market volatilities on Ford and Impresa Sociedade 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 Impresa Sociedade. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Impresa Sociedade.
Diversification Opportunities for Ford and Impresa Sociedade
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between Ford and Impresa is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Impresa Sociedade in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Impresa Sociedade 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 Impresa Sociedade. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Impresa Sociedade has no effect on the direction of Ford i.e., Ford and Impresa Sociedade go up and down completely randomly.
Pair Corralation between Ford and Impresa Sociedade
Taking into account the 90-day investment horizon Ford Motor is expected to generate 0.73 times more return on investment than Impresa Sociedade. However, Ford Motor is 1.37 times less risky than Impresa Sociedade. It trades about 0.22 of its potential returns per unit of risk. Impresa Sociedade is currently generating about 0.01 per unit of risk. If you would invest 1,022 in Ford Motor on September 3, 2024 and sell it today you would earn a total of 91.00 from holding Ford Motor or generate 8.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Ford Motor vs. Impresa Sociedade
Performance |
| Timeline |
| Ford Motor |
| Impresa Sociedade |
Ford and Impresa Sociedade Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Impresa Sociedade
The main advantage of trading using opposite Ford and Impresa Sociedade positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Impresa Sociedade 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 Impresa Sociedade will offset losses from the drop in Impresa Sociedade's long position.| Ford vs. GreenPower Motor | Ford vs. ZEEKR Intelligent Technology | Ford vs. Volcon Inc | Ford vs. Ford Motor |
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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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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