Correlation Between Ford and KCAP FINANCIAL
Can any of the company-specific risk be diversified away by investing in both Ford and KCAP FINANCIAL 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 KCAP FINANCIAL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and KCAP FINANCIAL, you can compare the effects of market volatilities on Ford and KCAP FINANCIAL 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 KCAP FINANCIAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and KCAP FINANCIAL.
Diversification Opportunities for Ford and KCAP FINANCIAL
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Ford and KCAP is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and KCAP FINANCIAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KCAP FINANCIAL 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 KCAP FINANCIAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KCAP FINANCIAL has no effect on the direction of Ford i.e., Ford and KCAP FINANCIAL go up and down completely randomly.
Pair Corralation between Ford and KCAP FINANCIAL
If you would invest 1,073 in Ford Motor on August 31, 2024 and sell it today you would earn a total of 40.00 from holding Ford Motor or generate 3.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 0.0% |
| Values | Daily Returns |
Ford Motor vs. KCAP FINANCIAL
Performance |
| Timeline |
| Ford Motor |
| KCAP FINANCIAL |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Ford and KCAP FINANCIAL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and KCAP FINANCIAL
The main advantage of trading using opposite Ford and KCAP FINANCIAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, KCAP FINANCIAL 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 KCAP FINANCIAL will offset losses from the drop in KCAP FINANCIAL's long position.The idea behind Ford Motor and KCAP FINANCIAL 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.| KCAP FINANCIAL vs. PRECISION DRILLING P | KCAP FINANCIAL vs. GRIFFIN MINING LTD | KCAP FINANCIAL vs. PKSHA TECHNOLOGY INC | KCAP FINANCIAL vs. ORMAT TECHNOLOGIES |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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