Correlation Between Ford and Source KBW
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By analyzing existing cross correlation between Ford Motor and Source KBW NASDAQ, you can compare the effects of market volatilities on Ford and Source KBW 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 Source KBW. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Source KBW.
Diversification Opportunities for Ford and Source KBW
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Ford and Source is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Source KBW NASDAQ in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Source KBW NASDAQ 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 Source KBW. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Source KBW NASDAQ has no effect on the direction of Ford i.e., Ford and Source KBW go up and down completely randomly.
Pair Corralation between Ford and Source KBW
Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the Source KBW. In addition to that, Ford is 1.51 times more volatile than Source KBW NASDAQ. It trades about -0.21 of its total potential returns per unit of risk. Source KBW NASDAQ is currently generating about 0.17 per unit of volatility. If you would invest 5,572 in Source KBW NASDAQ on September 12, 2024 and sell it today you would earn a total of 221.00 from holding Source KBW NASDAQ or generate 3.97% 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. Source KBW NASDAQ
Performance |
| Timeline |
| Ford Motor |
| Source KBW NASDAQ |
Ford and Source KBW Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Source KBW
The main advantage of trading using opposite Ford and Source KBW positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Source KBW 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 Source KBW will offset losses from the drop in Source KBW's long position.The idea behind Ford Motor and Source KBW NASDAQ 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.| Source KBW vs. UBS Fund Solutions | Source KBW vs. Xtrackers II | Source KBW vs. Xtrackers Nikkei 225 | Source KBW vs. iShares VII PLC |
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.
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