Correlation Between Ford and Mühlbauer Holding
Can any of the company-specific risk be diversified away by investing in both Ford and Mühlbauer Holding 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 Mühlbauer Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Mhlbauer Holding AG, you can compare the effects of market volatilities on Ford and Mühlbauer Holding 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 Mühlbauer Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Mühlbauer Holding.
Diversification Opportunities for Ford and Mühlbauer Holding
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ford and Mühlbauer is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Mhlbauer Holding AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mühlbauer Holding 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 Mühlbauer Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mühlbauer Holding has no effect on the direction of Ford i.e., Ford and Mühlbauer Holding go up and down completely randomly.
Pair Corralation between Ford and Mühlbauer Holding
Taking into account the 90-day investment horizon Ford Motor is expected to generate 1.11 times more return on investment than Mühlbauer Holding. However, Ford is 1.11 times more volatile than Mhlbauer Holding AG. It trades about 0.23 of its potential returns per unit of risk. Mhlbauer Holding AG is currently generating about -0.22 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 Against |
| Strength | Very Weak |
| Accuracy | 91.3% |
| Values | Daily Returns |
Ford Motor vs. Mhlbauer Holding AG
Performance |
| Timeline |
| Ford Motor |
| Mühlbauer Holding |
Ford and Mühlbauer Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Mühlbauer Holding
The main advantage of trading using opposite Ford and Mühlbauer Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Mühlbauer Holding 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 Mühlbauer Holding will offset losses from the drop in Mühlbauer Holding's long position.The idea behind Ford Motor and Mhlbauer Holding AG 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.| Mühlbauer Holding vs. Westinghouse Air Brake | Mühlbauer Holding vs. Algonquin Power Utilities | Mühlbauer Holding vs. BOSTON BEER A | Mühlbauer Holding vs. The Boston Beer |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
Other Complementary Tools
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities |