Correlation Between Ford and KraneShares CSI
Can any of the company-specific risk be diversified away by investing in both Ford and KraneShares CSI 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 KraneShares CSI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and KraneShares CSI China, you can compare the effects of market volatilities on Ford and KraneShares CSI 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 KraneShares CSI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and KraneShares CSI.
Diversification Opportunities for Ford and KraneShares CSI
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ford and KraneShares is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and KraneShares CSI China in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KraneShares CSI China 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 KraneShares CSI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KraneShares CSI China has no effect on the direction of Ford i.e., Ford and KraneShares CSI go up and down completely randomly.
Pair Corralation between Ford and KraneShares CSI
Taking into account the 90-day investment horizon Ford Motor is expected to generate 1.13 times more return on investment than KraneShares CSI. However, Ford is 1.13 times more volatile than KraneShares CSI China. It trades about 0.0 of its potential returns per unit of risk. KraneShares CSI China is currently generating about -0.1 per unit of risk. If you would invest 1,091 in Ford Motor on August 24, 2024 and sell it today you would lose (11.00) from holding Ford Motor or give up 1.01% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ford Motor vs. KraneShares CSI China
Performance |
| Timeline |
| Ford Motor |
| KraneShares CSI China |
Ford and KraneShares CSI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and KraneShares CSI
The main advantage of trading using opposite Ford and KraneShares CSI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, KraneShares CSI 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 KraneShares CSI will offset losses from the drop in KraneShares CSI's long position.The idea behind Ford Motor and KraneShares CSI China 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.| KraneShares CSI vs. KraneShares ICBCCS SP | KraneShares CSI vs. KraneShares Electric Vehicles | KraneShares CSI vs. KraneShares CSI China | KraneShares CSI vs. KraneShares MSCI All |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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