Correlation Between Ford and IsraelLtd
Can any of the company-specific risk be diversified away by investing in both Ford and IsraelLtd 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 IsraelLtd into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Israel, you can compare the effects of market volatilities on Ford and IsraelLtd 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 IsraelLtd. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and IsraelLtd.
Diversification Opportunities for Ford and IsraelLtd
Modest diversification
The 3 months correlation between Ford and IsraelLtd is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Israel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IsraelLtd 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 IsraelLtd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IsraelLtd has no effect on the direction of Ford i.e., Ford and IsraelLtd go up and down completely randomly.
Pair Corralation between Ford and IsraelLtd
If you would invest 1,122 in Ford Motor on August 28, 2024 and sell it today you would earn a total of 18.00 from holding Ford Motor or generate 1.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Ford Motor vs. Israel
Performance |
| Timeline |
| Ford Motor |
| IsraelLtd |
Ford and IsraelLtd Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and IsraelLtd
The main advantage of trading using opposite Ford and IsraelLtd positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, IsraelLtd 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 IsraelLtd will offset losses from the drop in IsraelLtd's long position.The idea behind Ford Motor and Israel 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.| IsraelLtd vs. Aldel Financial II | IsraelLtd vs. Rackspace Technology | IsraelLtd vs. NetSol Technologies | IsraelLtd vs. Bill Com Holdings |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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