Correlation Between Ford and Matricelf
Can any of the company-specific risk be diversified away by investing in both Ford and Matricelf 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 Matricelf into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Matricelf, you can compare the effects of market volatilities on Ford and Matricelf 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 Matricelf. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Matricelf.
Diversification Opportunities for Ford and Matricelf
Average diversification
The 3 months correlation between Ford and Matricelf is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Matricelf in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Matricelf 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 Matricelf. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Matricelf has no effect on the direction of Ford i.e., Ford and Matricelf go up and down completely randomly.
Pair Corralation between Ford and Matricelf
Taking into account the 90-day investment horizon Ford Motor is expected to generate 0.96 times more return on investment than Matricelf. However, Ford Motor is 1.05 times less risky than Matricelf. It trades about -0.01 of its potential returns per unit of risk. Matricelf is currently generating about -0.03 per unit of risk. If you would invest 1,184 in Ford Motor on September 1, 2024 and sell it today you would lose (71.00) from holding Ford Motor or give up 6.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 76.19% |
| Values | Daily Returns |
Ford Motor vs. Matricelf
Performance |
| Timeline |
| Ford Motor |
| Matricelf |
Ford and Matricelf Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Matricelf
The main advantage of trading using opposite Ford and Matricelf positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Matricelf 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 Matricelf will offset losses from the drop in Matricelf's long position.The idea behind Ford Motor and Matricelf 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.| Matricelf vs. Nice | Matricelf vs. The Gold Bond | Matricelf vs. Bank Leumi Le Israel | Matricelf vs. ICL Israel Chemicals |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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