Correlation Between Ford and Major Cineplex
Can any of the company-specific risk be diversified away by investing in both Ford and Major Cineplex 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 Major Cineplex into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Major Cineplex Lifestyle, you can compare the effects of market volatilities on Ford and Major Cineplex 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 Major Cineplex. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Major Cineplex.
Diversification Opportunities for Ford and Major Cineplex
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Ford and Major is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Major Cineplex Lifestyle in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Major Cineplex Lifestyle 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 Major Cineplex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Major Cineplex Lifestyle has no effect on the direction of Ford i.e., Ford and Major Cineplex go up and down completely randomly.
Pair Corralation between Ford and Major Cineplex
Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the Major Cineplex. But the stock apears to be less risky and, when comparing its historical volatility, Ford Motor is 35.44 times less risky than Major Cineplex. The stock trades about 0.0 of its potential returns per unit of risk. The Major Cineplex Lifestyle is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 382.00 in Major Cineplex Lifestyle on September 2, 2024 and sell it today you would earn a total of 44.00 from holding Major Cineplex Lifestyle or generate 11.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.21% |
| Values | Daily Returns |
Ford Motor vs. Major Cineplex Lifestyle
Performance |
| Timeline |
| Ford Motor |
| Major Cineplex Lifestyle |
Ford and Major Cineplex Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Major Cineplex
The main advantage of trading using opposite Ford and Major Cineplex positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Major Cineplex 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 Major Cineplex will offset losses from the drop in Major Cineplex's long position.The idea behind Ford Motor and Major Cineplex Lifestyle 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.| Major Cineplex vs. LH Shopping Centers | Major Cineplex vs. Land and Houses | Major Cineplex vs. Quality Houses Property | Major Cineplex vs. Impact Growth REIT |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
Other Complementary Tools
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios |