Correlation Between Ford and Lakeland Financial
Can any of the company-specific risk be diversified away by investing in both Ford and Lakeland 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 Lakeland 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 Lakeland Financial, you can compare the effects of market volatilities on Ford and Lakeland 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 Lakeland Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Lakeland Financial.
Diversification Opportunities for Ford and Lakeland Financial
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ford and Lakeland is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Lakeland Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lakeland 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 Lakeland Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lakeland Financial has no effect on the direction of Ford i.e., Ford and Lakeland Financial go up and down completely randomly.
Pair Corralation between Ford and Lakeland Financial
Taking into account the 90-day investment horizon Ford is expected to generate 1.27 times less return on investment than Lakeland Financial. In addition to that, Ford is 1.04 times more volatile than Lakeland Financial. It trades about 0.01 of its total potential returns per unit of risk. Lakeland Financial is currently generating about 0.02 per unit of volatility. If you would invest 6,963 in Lakeland Financial on August 28, 2024 and sell it today you would earn a total of 622.00 from holding Lakeland Financial or generate 8.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ford Motor vs. Lakeland Financial
Performance |
| Timeline |
| Ford Motor |
| Lakeland Financial |
Ford and Lakeland Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Lakeland Financial
The main advantage of trading using opposite Ford and Lakeland Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Lakeland 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 Lakeland Financial will offset losses from the drop in Lakeland Financial's long position.The idea behind Ford Motor and Lakeland 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.| Lakeland Financial vs. Home Bancorp | Lakeland Financial vs. Heritage Financial | Lakeland Financial vs. First Northwest Bancorp | Lakeland Financial vs. HomeTrust Bancshares |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
Other Complementary Tools
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios |