Correlation Between Ford and Liberty Tri
Can any of the company-specific risk be diversified away by investing in both Ford and Liberty Tri 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 Liberty Tri into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Liberty Tri, you can compare the effects of market volatilities on Ford and Liberty Tri 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 Liberty Tri. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Liberty Tri.
Diversification Opportunities for Ford and Liberty Tri
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Ford and Liberty is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Liberty Tri in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Liberty Tri 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 Liberty Tri. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Liberty Tri has no effect on the direction of Ford i.e., Ford and Liberty Tri go up and down completely randomly.
Pair Corralation between Ford and Liberty Tri
Taking into account the 90-day investment horizon Ford Motor is expected to generate 0.49 times more return on investment than Liberty Tri. However, Ford Motor is 2.03 times less risky than Liberty Tri. It trades about 0.0 of its potential returns per unit of risk. Liberty Tri is currently generating about -0.11 per unit of risk. If you would invest 1,177 in Ford Motor on November 4, 2024 and sell it today you would lose (169.00) from holding Ford Motor or give up 14.36% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 22.63% |
| Values | Daily Returns |
Ford Motor vs. Liberty Tri
Performance |
| Timeline |
| Ford Motor |
| Liberty Tri |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Ford and Liberty Tri Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Liberty Tri
The main advantage of trading using opposite Ford and Liberty Tri positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Liberty Tri 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 Liberty Tri will offset losses from the drop in Liberty Tri's long position.The idea behind Ford Motor and Liberty Tri 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.| Liberty Tri vs. MediaAlpha | Liberty Tri vs. Vivid Seats | Liberty Tri vs. Cheetah Mobile | Liberty Tri vs. Autohome |
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.
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