Correlation Between Ford and Motor Oil
Can any of the company-specific risk be diversified away by investing in both Ford and Motor Oil 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 Motor Oil into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Motor Oil Corinth, you can compare the effects of market volatilities on Ford and Motor Oil 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 Motor Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Motor Oil.
Diversification Opportunities for Ford and Motor Oil
Very good diversification
The 3 months correlation between Ford and Motor is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Motor Oil Corinth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Motor Oil Corinth 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 Motor Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Motor Oil Corinth has no effect on the direction of Ford i.e., Ford and Motor Oil go up and down completely randomly.
Pair Corralation between Ford and Motor Oil
Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the Motor Oil. In addition to that, Ford is 1.29 times more volatile than Motor Oil Corinth. It trades about 0.0 of its total potential returns per unit of risk. Motor Oil Corinth is currently generating about 0.0 per unit of volatility. If you would invest 2,086 in Motor Oil Corinth on August 31, 2024 and sell it today you would lose (125.00) from holding Motor Oil Corinth or give up 5.99% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.47% |
| Values | Daily Returns |
Ford Motor vs. Motor Oil Corinth
Performance |
| Timeline |
| Ford Motor |
| Motor Oil Corinth |
Ford and Motor Oil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Motor Oil
The main advantage of trading using opposite Ford and Motor Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Motor Oil 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 Motor Oil will offset losses from the drop in Motor Oil's long position.The idea behind Ford Motor and Motor Oil Corinth 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.| Motor Oil vs. Mytilineos SA | Motor Oil vs. Hellenic Petroleum SA | Motor Oil vs. Greek Organization of | Motor Oil vs. Hellenic Telecommunications Organization |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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