Correlation Between Ford and JE Cleantech
Can any of the company-specific risk be diversified away by investing in both Ford and JE Cleantech 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 JE Cleantech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and JE Cleantech Holdings, you can compare the effects of market volatilities on Ford and JE Cleantech 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 JE Cleantech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and JE Cleantech.
Diversification Opportunities for Ford and JE Cleantech
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Ford and JCSE is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and JE Cleantech Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JE Cleantech Holdings 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 JE Cleantech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JE Cleantech Holdings has no effect on the direction of Ford i.e., Ford and JE Cleantech go up and down completely randomly.
Pair Corralation between Ford and JE Cleantech
Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the JE Cleantech. But the stock apears to be less risky and, when comparing its historical volatility, Ford Motor is 4.1 times less risky than JE Cleantech. The stock trades about 0.0 of its potential returns per unit of risk. The JE Cleantech Holdings is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 183.00 in JE Cleantech Holdings on August 31, 2024 and sell it today you would lose (64.00) from holding JE Cleantech Holdings or give up 34.97% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.73% |
| Values | Daily Returns |
Ford Motor vs. JE Cleantech Holdings
Performance |
| Timeline |
| Ford Motor |
| JE Cleantech Holdings |
Ford and JE Cleantech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and JE Cleantech
The main advantage of trading using opposite Ford and JE Cleantech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, JE Cleantech 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 JE Cleantech will offset losses from the drop in JE Cleantech's long position.The idea behind Ford Motor and JE Cleantech Holdings 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.| JE Cleantech vs. IDEX Corporation | JE Cleantech vs. Watts Water Technologies | JE Cleantech vs. Donaldson | JE Cleantech vs. Gorman Rupp |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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