Correlation Between Ford and Limoneira
Can any of the company-specific risk be diversified away by investing in both Ford and Limoneira 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 Limoneira into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Limoneira Co, you can compare the effects of market volatilities on Ford and Limoneira 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 Limoneira. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Limoneira.
Diversification Opportunities for Ford and Limoneira
Modest diversification
The 3 months correlation between Ford and Limoneira is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Limoneira Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Limoneira 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 Limoneira. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Limoneira has no effect on the direction of Ford i.e., Ford and Limoneira go up and down completely randomly.
Pair Corralation between Ford and Limoneira
Taking into account the 90-day investment horizon Ford is expected to generate 1.86 times less return on investment than Limoneira. In addition to that, Ford is 1.06 times more volatile than Limoneira Co. It trades about 0.04 of its total potential returns per unit of risk. Limoneira Co is currently generating about 0.08 per unit of volatility. If you would invest 2,633 in Limoneira Co on August 28, 2024 and sell it today you would earn a total of 100.00 from holding Limoneira Co or generate 3.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ford Motor vs. Limoneira Co
Performance |
| Timeline |
| Ford Motor |
| Limoneira |
Ford and Limoneira Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Limoneira
The main advantage of trading using opposite Ford and Limoneira positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Limoneira 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 Limoneira will offset losses from the drop in Limoneira's long position.The idea behind Ford Motor and Limoneira Co 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.| Limoneira vs. Dole PLC | Limoneira vs. Alico Inc | Limoneira vs. Adecoagro SA | Limoneira vs. Cal Maine Foods |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
Other Complementary Tools
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Stocks Directory Find actively traded stocks across global markets | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins |