Correlation Between Ford and Mainstay Equity
Can any of the company-specific risk be diversified away by investing in both Ford and Mainstay Equity 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 Mainstay Equity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Mainstay Equity Etf, you can compare the effects of market volatilities on Ford and Mainstay Equity 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 Mainstay Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Mainstay Equity.
Diversification Opportunities for Ford and Mainstay Equity
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Ford and Mainstay is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Mainstay Equity Etf in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mainstay Equity Etf 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 Mainstay Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mainstay Equity Etf has no effect on the direction of Ford i.e., Ford and Mainstay Equity go up and down completely randomly.
Pair Corralation between Ford and Mainstay Equity
Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the Mainstay Equity. In addition to that, Ford is 2.85 times more volatile than Mainstay Equity Etf. It trades about 0.0 of its total potential returns per unit of risk. Mainstay Equity Etf is currently generating about 0.09 per unit of volatility. If you would invest 1,264 in Mainstay Equity Etf on August 31, 2024 and sell it today you would earn a total of 381.00 from holding Mainstay Equity Etf or generate 30.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.73% |
| Values | Daily Returns |
Ford Motor vs. Mainstay Equity Etf
Performance |
| Timeline |
| Ford Motor |
| Mainstay Equity Etf |
Ford and Mainstay Equity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Mainstay Equity
The main advantage of trading using opposite Ford and Mainstay Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Mainstay Equity 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 Mainstay Equity will offset losses from the drop in Mainstay Equity's long position.The idea behind Ford Motor and Mainstay Equity Etf 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.| Mainstay Equity vs. Us Real Estate | Mainstay Equity vs. Virtus Real Estate | Mainstay Equity vs. Prudential Real Estate | Mainstay Equity vs. Columbia Real Estate |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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