Correlation Between Ford and Korea Closed
Can any of the company-specific risk be diversified away by investing in both Ford and Korea Closed 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 Korea Closed into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Korea Closed, you can compare the effects of market volatilities on Ford and Korea Closed 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 Korea Closed. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Korea Closed.
Diversification Opportunities for Ford and Korea Closed
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Ford and Korea is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Korea Closed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korea Closed 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 Korea Closed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korea Closed has no effect on the direction of Ford i.e., Ford and Korea Closed go up and down completely randomly.
Pair Corralation between Ford and Korea Closed
Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the Korea Closed. In addition to that, Ford is 2.26 times more volatile than Korea Closed. It trades about -0.13 of its total potential returns per unit of risk. Korea Closed is currently generating about 0.24 per unit of volatility. If you would invest 1,978 in Korea Closed on November 18, 2024 and sell it today you would earn a total of 106.00 from holding Korea Closed or generate 5.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ford Motor vs. Korea Closed
Performance |
| Timeline |
| Ford Motor |
| Korea Closed |
Ford and Korea Closed Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Korea Closed
The main advantage of trading using opposite Ford and Korea Closed positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Korea Closed 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 Korea Closed will offset losses from the drop in Korea Closed's long position.The idea behind Ford Motor and Korea Closed 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.| Korea Closed vs. Mexico Equity And | Korea Closed vs. Western Asset Global | Korea Closed vs. New Germany Closed | Korea Closed vs. MFS Charter Income |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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