Correlation Between Ford and Marine Bancorp
Can any of the company-specific risk be diversified away by investing in both Ford and Marine Bancorp 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 Marine Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Marine Bancorp of, you can compare the effects of market volatilities on Ford and Marine Bancorp 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 Marine Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Marine Bancorp.
Diversification Opportunities for Ford and Marine Bancorp
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Ford and Marine is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Marine Bancorp of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marine Bancorp 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 Marine Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marine Bancorp has no effect on the direction of Ford i.e., Ford and Marine Bancorp go up and down completely randomly.
Pair Corralation between Ford and Marine Bancorp
Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the Marine Bancorp. In addition to that, Ford is 28.57 times more volatile than Marine Bancorp of. It trades about -0.21 of its total potential returns per unit of risk. Marine Bancorp of is currently generating about 0.22 per unit of volatility. If you would invest 3,950 in Marine Bancorp of on September 12, 2024 and sell it today you would earn a total of 10.00 from holding Marine Bancorp of or generate 0.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Ford Motor vs. Marine Bancorp of
Performance |
| Timeline |
| Ford Motor |
| Marine Bancorp |
Ford and Marine Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Marine Bancorp
The main advantage of trading using opposite Ford and Marine Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Marine Bancorp 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 Marine Bancorp will offset losses from the drop in Marine Bancorp's long position.The idea behind Ford Motor and Marine Bancorp of 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.| Marine Bancorp vs. Mills Music Trust | Marine Bancorp vs. East Africa Metals | Marine Bancorp vs. Chester Mining | Marine Bancorp vs. AKITA Drilling |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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