Correlation Between Ford and Meitav Trade
Can any of the company-specific risk be diversified away by investing in both Ford and Meitav Trade 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 Meitav Trade into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Meitav Trade Inv, you can compare the effects of market volatilities on Ford and Meitav Trade 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 Meitav Trade. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Meitav Trade.
Diversification Opportunities for Ford and Meitav Trade
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Ford and Meitav is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Meitav Trade Inv in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Meitav Trade Inv 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 Meitav Trade. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Meitav Trade Inv has no effect on the direction of Ford i.e., Ford and Meitav Trade go up and down completely randomly.
Pair Corralation between Ford and Meitav Trade
Taking into account the 90-day investment horizon Ford is expected to generate 6.56 times less return on investment than Meitav Trade. In addition to that, Ford is 1.74 times more volatile than Meitav Trade Inv. It trades about 0.08 of its total potential returns per unit of risk. Meitav Trade Inv is currently generating about 0.89 per unit of volatility. If you would invest 835.00 in Meitav Trade Inv on August 29, 2024 and sell it today you would earn a total of 316.00 from holding Meitav Trade Inv or generate 37.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 67.44% |
| Values | Daily Returns |
Ford Motor vs. Meitav Trade Inv
Performance |
| Timeline |
| Ford Motor |
| Meitav Trade Inv |
Ford and Meitav Trade Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Meitav Trade
The main advantage of trading using opposite Ford and Meitav Trade positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Meitav Trade 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 Meitav Trade will offset losses from the drop in Meitav Trade's long position.The idea behind Ford Motor and Meitav Trade Inv 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.| Meitav Trade vs. Nice | Meitav Trade vs. The Gold Bond | Meitav Trade vs. Bank Leumi Le Israel | Meitav Trade 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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