Correlation Between Ford and Kinetics Market
Can any of the company-specific risk be diversified away by investing in both Ford and Kinetics Market 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 Kinetics Market into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Kinetics Market Opportunities, you can compare the effects of market volatilities on Ford and Kinetics Market 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 Kinetics Market. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Kinetics Market.
Diversification Opportunities for Ford and Kinetics Market
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Ford and Kinetics is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Kinetics Market Opportunities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kinetics Market Oppo 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 Kinetics Market. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kinetics Market Oppo has no effect on the direction of Ford i.e., Ford and Kinetics Market go up and down completely randomly.
Pair Corralation between Ford and Kinetics Market
Taking into account the 90-day investment horizon Ford is expected to generate 15.16 times less return on investment than Kinetics Market. In addition to that, Ford is 1.17 times more volatile than Kinetics Market Opportunities. It trades about 0.04 of its total potential returns per unit of risk. Kinetics Market Opportunities is currently generating about 0.73 per unit of volatility. If you would invest 7,299 in Kinetics Market Opportunities on August 28, 2024 and sell it today you would earn a total of 3,064 from holding Kinetics Market Opportunities or generate 41.98% 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. Kinetics Market Opportunities
Performance |
| Timeline |
| Ford Motor |
| Kinetics Market Oppo |
Ford and Kinetics Market Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Kinetics Market
The main advantage of trading using opposite Ford and Kinetics Market positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Kinetics Market 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 Kinetics Market will offset losses from the drop in Kinetics Market's long position.The idea behind Ford Motor and Kinetics Market Opportunities 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.| Kinetics Market vs. Kinetics Global Fund | Kinetics Market vs. Kinetics Global Fund | Kinetics Market vs. Kinetics Internet Fund | Kinetics Market vs. Kinetics Global Fund |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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