Correlation Between Ford and JD Food
Can any of the company-specific risk be diversified away by investing in both Ford and JD Food 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 JD Food into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and JD Food PCL, you can compare the effects of market volatilities on Ford and JD Food 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 JD Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and JD Food.
Diversification Opportunities for Ford and JD Food
Very good diversification
The 3 months correlation between Ford and JDF is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and JD Food PCL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JD Food PCL 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 JD Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JD Food PCL has no effect on the direction of Ford i.e., Ford and JD Food go up and down completely randomly.
Pair Corralation between Ford and JD Food
Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the JD Food. In addition to that, Ford is 1.41 times more volatile than JD Food PCL. It trades about 0.0 of its total potential returns per unit of risk. JD Food PCL is currently generating about 0.03 per unit of volatility. If you would invest 202.00 in JD Food PCL on August 29, 2024 and sell it today you would earn a total of 2.00 from holding JD Food PCL or generate 0.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Ford Motor vs. JD Food PCL
Performance |
| Timeline |
| Ford Motor |
| JD Food PCL |
Ford and JD Food Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and JD Food
The main advantage of trading using opposite Ford and JD Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, JD Food 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 JD Food will offset losses from the drop in JD Food's long position.The idea behind Ford Motor and JD Food PCL 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.| JD Food vs. Carabao Group Public | JD Food vs. Jay Mart Public | JD Food vs. Gulf Energy Development | JD Food vs. KCE Electronics Public |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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