Correlation Between Ford and Multi Index
Can any of the company-specific risk be diversified away by investing in both Ford and Multi Index 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 Multi Index into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Multi Index 2040 Lifetime, you can compare the effects of market volatilities on Ford and Multi Index 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 Multi Index. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Multi Index.
Diversification Opportunities for Ford and Multi Index
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Ford and Multi is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Multi Index 2040 Lifetime in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Multi Index 2040 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 Multi Index. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Multi Index 2040 has no effect on the direction of Ford i.e., Ford and Multi Index go up and down completely randomly.
Pair Corralation between Ford and Multi Index
Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the Multi Index. In addition to that, Ford is 4.15 times more volatile than Multi Index 2040 Lifetime. It trades about -0.18 of its total potential returns per unit of risk. Multi Index 2040 Lifetime is currently generating about 0.18 per unit of volatility. If you would invest 1,426 in Multi Index 2040 Lifetime on September 13, 2024 and sell it today you would earn a total of 21.00 from holding Multi Index 2040 Lifetime or generate 1.47% 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. Multi Index 2040 Lifetime
Performance |
| Timeline |
| Ford Motor |
| Multi Index 2040 |
Ford and Multi Index Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Multi Index
The main advantage of trading using opposite Ford and Multi Index positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Multi Index 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 Multi Index will offset losses from the drop in Multi Index's long position.The idea behind Ford Motor and Multi Index 2040 Lifetime 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.| Multi Index vs. Regional Bank Fund | Multi Index vs. Regional Bank Fund | Multi Index vs. Multimanager Lifestyle Moderate | Multi Index vs. Multimanager Lifestyle Balanced |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
Other Complementary Tools
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Stocks Directory Find actively traded stocks across global markets | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes |