Correlation Between Ford and Kennedy Wilson
Can any of the company-specific risk be diversified away by investing in both Ford and Kennedy Wilson 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 Kennedy Wilson into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Kennedy Wilson Holdings, you can compare the effects of market volatilities on Ford and Kennedy Wilson 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 Kennedy Wilson. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Kennedy Wilson.
Diversification Opportunities for Ford and Kennedy Wilson
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Ford and Kennedy is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Kennedy Wilson Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kennedy Wilson Holdings 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 Kennedy Wilson. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kennedy Wilson Holdings has no effect on the direction of Ford i.e., Ford and Kennedy Wilson go up and down completely randomly.
Pair Corralation between Ford and Kennedy Wilson
Taking into account the 90-day investment horizon Ford Motor is expected to generate 0.87 times more return on investment than Kennedy Wilson. However, Ford Motor is 1.14 times less risky than Kennedy Wilson. It trades about 0.17 of its potential returns per unit of risk. Kennedy Wilson Holdings is currently generating about 0.09 per unit of risk. If you would invest 1,033 in Ford Motor on August 31, 2024 and sell it today you would earn a total of 77.00 from holding Ford Motor or generate 7.45% 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. Kennedy Wilson Holdings
Performance |
| Timeline |
| Ford Motor |
| Kennedy Wilson Holdings |
Ford and Kennedy Wilson Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Kennedy Wilson
The main advantage of trading using opposite Ford and Kennedy Wilson positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Kennedy Wilson 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 Kennedy Wilson will offset losses from the drop in Kennedy Wilson's long position.The idea behind Ford Motor and Kennedy Wilson Holdings 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.| Kennedy Wilson vs. Frp Holdings Ord | Kennedy Wilson vs. Transcontinental Realty Investors | Kennedy Wilson vs. Anywhere Real Estate | Kennedy Wilson vs. Re Max Holding |
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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