Correlation Between Ford and MPX International
Can any of the company-specific risk be diversified away by investing in both Ford and MPX International 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 MPX International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and MPX International Corp, you can compare the effects of market volatilities on Ford and MPX International 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 MPX International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and MPX International.
Diversification Opportunities for Ford and MPX International
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Ford and MPX is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and MPX International Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MPX International Corp 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 MPX International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MPX International Corp has no effect on the direction of Ford i.e., Ford and MPX International go up and down completely randomly.
Pair Corralation between Ford and MPX International
Taking into account the 90-day investment horizon Ford is expected to generate 672.01 times less return on investment than MPX International. But when comparing it to its historical volatility, Ford Motor is 53.35 times less risky than MPX International. It trades about 0.01 of its potential returns per unit of risk. MPX International Corp is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 0.01 in MPX International Corp on August 28, 2024 and sell it today you would earn a total of 0.02 from holding MPX International Corp or generate 200.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ford Motor vs. MPX International Corp
Performance |
| Timeline |
| Ford Motor |
| MPX International Corp |
Ford and MPX International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and MPX International
The main advantage of trading using opposite Ford and MPX International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, MPX International 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 MPX International will offset losses from the drop in MPX International's long position.The idea behind Ford Motor and MPX International Corp 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.| MPX International vs. North Bud Farms | MPX International vs. CanaQuest Medical Corp | MPX International vs. City View Green | MPX International vs. Benchmark Botanics |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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