Correlation Between Ford and Kadant
Can any of the company-specific risk be diversified away by investing in both Ford and Kadant 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 Kadant into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Kadant Inc, you can compare the effects of market volatilities on Ford and Kadant 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 Kadant. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Kadant.
Diversification Opportunities for Ford and Kadant
Very weak diversification
The 3 months correlation between Ford and Kadant is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Kadant Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kadant Inc 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 Kadant. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kadant Inc has no effect on the direction of Ford i.e., Ford and Kadant go up and down completely randomly.
Pair Corralation between Ford and Kadant
Taking into account the 90-day investment horizon Ford is expected to generate 16.42 times less return on investment than Kadant. In addition to that, Ford is 1.19 times more volatile than Kadant Inc. It trades about 0.0 of its total potential returns per unit of risk. Kadant Inc is currently generating about 0.09 per unit of volatility. If you would invest 19,050 in Kadant Inc on August 23, 2024 and sell it today you would earn a total of 21,792 from holding Kadant Inc or generate 114.39% 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. Kadant Inc
Performance |
| Timeline |
| Ford Motor |
| Kadant Inc |
Ford and Kadant Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Kadant
The main advantage of trading using opposite Ford and Kadant positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Kadant 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 Kadant will offset losses from the drop in Kadant's long position.The idea behind Ford Motor and Kadant Inc 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.| Kadant vs. Small Cap Core | Kadant vs. Freedom Holding Corp | Kadant vs. Gfl Environmental Holdings | Kadant vs. Growth Fund Of |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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