Correlation Between Ford and Egyptian Media
Can any of the company-specific risk be diversified away by investing in both Ford and Egyptian Media 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 Egyptian Media into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Egyptian Media Production, you can compare the effects of market volatilities on Ford and Egyptian Media 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 Egyptian Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Egyptian Media.
Diversification Opportunities for Ford and Egyptian Media
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Ford and Egyptian is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Egyptian Media Production in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Egyptian Media Production 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 Egyptian Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Egyptian Media Production has no effect on the direction of Ford i.e., Ford and Egyptian Media go up and down completely randomly.
Pair Corralation between Ford and Egyptian Media
Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the Egyptian Media. But the stock apears to be less risky and, when comparing its historical volatility, Ford Motor is 1.3 times less risky than Egyptian Media. The stock trades about 0.0 of its potential returns per unit of risk. The Egyptian Media Production is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 1,644 in Egyptian Media Production on September 2, 2024 and sell it today you would earn a total of 826.00 from holding Egyptian Media Production or generate 50.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 77.78% |
| Values | Daily Returns |
Ford Motor vs. Egyptian Media Production
Performance |
| Timeline |
| Ford Motor |
| Egyptian Media Production |
Ford and Egyptian Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Egyptian Media
The main advantage of trading using opposite Ford and Egyptian Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Egyptian Media 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 Egyptian Media will offset losses from the drop in Egyptian Media's long position.The idea behind Ford Motor and Egyptian Media Production 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.| Egyptian Media vs. Egyptians For Investment | Egyptian Media vs. Misr Oils Soap | Egyptian Media vs. Global Telecom Holding | Egyptian Media vs. Qatar Natl Bank |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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