Correlation Between Ford and Martin Currie
Can any of the company-specific risk be diversified away by investing in both Ford and Martin Currie 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 Martin Currie into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Martin Currie Sustainable, you can compare the effects of market volatilities on Ford and Martin Currie 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 Martin Currie. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Martin Currie.
Diversification Opportunities for Ford and Martin Currie
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ford and Martin is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Martin Currie Sustainable in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Martin Currie Sustainable 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 Martin Currie. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Martin Currie Sustainable has no effect on the direction of Ford i.e., Ford and Martin Currie go up and down completely randomly.
Pair Corralation between Ford and Martin Currie
Taking into account the 90-day investment horizon Ford Motor is expected to generate 2.47 times more return on investment than Martin Currie. However, Ford is 2.47 times more volatile than Martin Currie Sustainable. It trades about 0.05 of its potential returns per unit of risk. Martin Currie Sustainable is currently generating about -0.31 per unit of risk. If you would invest 1,092 in Ford Motor on August 26, 2024 and sell it today you would earn a total of 26.00 from holding Ford Motor or generate 2.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ford Motor vs. Martin Currie Sustainable
Performance |
| Timeline |
| Ford Motor |
| Martin Currie Sustainable |
Ford and Martin Currie Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Martin Currie
The main advantage of trading using opposite Ford and Martin Currie positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Martin Currie 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 Martin Currie will offset losses from the drop in Martin Currie's long position.The idea behind Ford Motor and Martin Currie Sustainable 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.| Martin Currie vs. BrandywineGLOBAL Dynamic | Martin Currie vs. First Trust Growth | Martin Currie vs. Invesco NASDAQ Future | Martin Currie vs. Burney Factor Rotation |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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