Correlation Between Ford and Lotus Retail
Can any of the company-specific risk be diversified away by investing in both Ford and Lotus Retail 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 Lotus Retail into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Lotus Retail Growth, you can compare the effects of market volatilities on Ford and Lotus Retail 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 Lotus Retail. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Lotus Retail.
Diversification Opportunities for Ford and Lotus Retail
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ford and Lotus is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Lotus Retail Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lotus Retail Growth 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 Lotus Retail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lotus Retail Growth has no effect on the direction of Ford i.e., Ford and Lotus Retail go up and down completely randomly.
Pair Corralation between Ford and Lotus Retail
Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the Lotus Retail. In addition to that, Ford is 1.87 times more volatile than Lotus Retail Growth. It trades about 0.0 of its total potential returns per unit of risk. Lotus Retail Growth is currently generating about 0.03 per unit of volatility. If you would invest 1,148 in Lotus Retail Growth on August 31, 2024 and sell it today you would earn a total of 122.00 from holding Lotus Retail Growth or generate 10.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.72% |
| Values | Daily Returns |
Ford Motor vs. Lotus Retail Growth
Performance |
| Timeline |
| Ford Motor |
| Lotus Retail Growth |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Ford and Lotus Retail Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Lotus Retail
The main advantage of trading using opposite Ford and Lotus Retail positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Lotus Retail 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 Lotus Retail will offset losses from the drop in Lotus Retail's long position.The idea behind Ford Motor and Lotus Retail Growth 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.| Lotus Retail vs. CPN Retail Growth | Lotus Retail vs. Ticon Freehold and | Lotus Retail vs. WHA Premium Growth | Lotus Retail vs. Major Cineplex Lifestyle |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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