Correlation Between Ford and Mowi ASA
Can any of the company-specific risk be diversified away by investing in both Ford and Mowi ASA 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 Mowi ASA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Mowi ASA, you can compare the effects of market volatilities on Ford and Mowi ASA 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 Mowi ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Mowi ASA.
Diversification Opportunities for Ford and Mowi ASA
Very weak diversification
The 3 months correlation between Ford and Mowi is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Mowi ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mowi ASA 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 Mowi ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mowi ASA has no effect on the direction of Ford i.e., Ford and Mowi ASA go up and down completely randomly.
Pair Corralation between Ford and Mowi ASA
Taking into account the 90-day investment horizon Ford Motor is expected to generate 1.69 times more return on investment than Mowi ASA. However, Ford is 1.69 times more volatile than Mowi ASA. It trades about 0.23 of its potential returns per unit of risk. Mowi ASA is currently generating about 0.26 per unit of risk. If you would invest 1,015 in Ford Motor on September 1, 2024 and sell it today you would earn a total of 98.00 from holding Ford Motor or generate 9.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Ford Motor vs. Mowi ASA
Performance |
| Timeline |
| Ford Motor |
| Mowi ASA |
Ford and Mowi ASA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Mowi ASA
The main advantage of trading using opposite Ford and Mowi ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Mowi ASA 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 Mowi ASA will offset losses from the drop in Mowi ASA's long position.The idea behind Ford Motor and Mowi ASA 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.| Mowi ASA vs. SalMar ASA | Mowi ASA vs. Lery Seafood Group | Mowi ASA vs. Pf Bakkafrost | Mowi ASA vs. Grieg Seafood ASA |
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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