Correlation Between Ford and Key Energy
Can any of the company-specific risk be diversified away by investing in both Ford and Key Energy 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 Key Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Key Energy Services, you can compare the effects of market volatilities on Ford and Key Energy 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 Key Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Key Energy.
Diversification Opportunities for Ford and Key Energy
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Ford and Key is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Key Energy Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Key Energy Services 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 Key Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Key Energy Services has no effect on the direction of Ford i.e., Ford and Key Energy go up and down completely randomly.
Pair Corralation between Ford and Key Energy
If you would invest 961.00 in Ford Motor on January 5, 2025 and sell it today you would lose (3.00) from holding Ford Motor or give up 0.31% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 0.0% |
| Values | Daily Returns |
Ford Motor vs. Key Energy Services
Performance |
| Timeline |
| Ford Motor |
| Key Energy Services |
Risk-Adjusted Performance
Very Weak
Weak | Strong |
Ford and Key Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Key Energy
The main advantage of trading using opposite Ford and Key Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Key Energy 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 Key Energy will offset losses from the drop in Key Energy's long position.The idea behind Ford Motor and Key Energy Services 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.| Key Energy vs. Archrock | Key Energy vs. Bristow Group | Key Energy vs. TechnipFMC PLC | Key Energy vs. Now Inc |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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