Correlation Between Ford and Miton UK
Can any of the company-specific risk be diversified away by investing in both Ford and Miton UK 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 Miton UK into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Miton UK MicroCap, you can compare the effects of market volatilities on Ford and Miton UK 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 Miton UK. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Miton UK.
Diversification Opportunities for Ford and Miton UK
Very good diversification
The 3 months correlation between Ford and Miton is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Miton UK MicroCap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Miton UK MicroCap 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 Miton UK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Miton UK MicroCap has no effect on the direction of Ford i.e., Ford and Miton UK go up and down completely randomly.
Pair Corralation between Ford and Miton UK
Taking into account the 90-day investment horizon Ford Motor is expected to generate 3.83 times more return on investment than Miton UK. However, Ford is 3.83 times more volatile than Miton UK MicroCap. It trades about 0.19 of its potential returns per unit of risk. Miton UK MicroCap is currently generating about 0.22 per unit of risk. If you would invest 1,027 in Ford Motor on August 30, 2024 and sell it today you would earn a total of 83.00 from holding Ford Motor or generate 8.08% 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. Miton UK MicroCap
Performance |
| Timeline |
| Ford Motor |
| Miton UK MicroCap |
Ford and Miton UK Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Miton UK
The main advantage of trading using opposite Ford and Miton UK positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Miton UK 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 Miton UK will offset losses from the drop in Miton UK's long position.The idea behind Ford Motor and Miton UK MicroCap 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.| Miton UK vs. Sabre Insurance Group | Miton UK vs. Vienna Insurance Group | Miton UK vs. Schroders Investment Trusts | Miton UK vs. Herald Investment Trust |
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 CEOs Directory module to screen CEOs from public companies around the world.
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