Correlation Between Ford and Jacob Forward
Can any of the company-specific risk be diversified away by investing in both Ford and Jacob Forward 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 Jacob Forward into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Jacob Forward ETF, you can compare the effects of market volatilities on Ford and Jacob Forward 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 Jacob Forward. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Jacob Forward.
Diversification Opportunities for Ford and Jacob Forward
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Ford and Jacob is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Jacob Forward ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jacob Forward ETF 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 Jacob Forward. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jacob Forward ETF has no effect on the direction of Ford i.e., Ford and Jacob Forward go up and down completely randomly.
Pair Corralation between Ford and Jacob Forward
Taking into account the 90-day investment horizon Ford is expected to generate 1.95 times less return on investment than Jacob Forward. But when comparing it to its historical volatility, Ford Motor is 1.11 times less risky than Jacob Forward. It trades about 0.19 of its potential returns per unit of risk. Jacob Forward ETF is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest 1,077 in Jacob Forward ETF on August 30, 2024 and sell it today you would earn a total of 180.00 from holding Jacob Forward ETF or generate 16.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ford Motor vs. Jacob Forward ETF
Performance |
| Timeline |
| Ford Motor |
| Jacob Forward ETF |
Ford and Jacob Forward Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Jacob Forward
The main advantage of trading using opposite Ford and Jacob Forward positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Jacob Forward 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 Jacob Forward will offset losses from the drop in Jacob Forward's long position.The idea behind Ford Motor and Jacob Forward ETF 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.| Jacob Forward vs. Amplify Thematic All Stars | Jacob Forward vs. Jacob Micro Cap | Jacob Forward vs. Main Thematic Innovation |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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