Correlation Between Ford and Nanoform Finland
Can any of the company-specific risk be diversified away by investing in both Ford and Nanoform Finland 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 Nanoform Finland into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Nanoform Finland Plc, you can compare the effects of market volatilities on Ford and Nanoform Finland 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 Nanoform Finland. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Nanoform Finland.
Diversification Opportunities for Ford and Nanoform Finland
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between Ford and Nanoform is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Nanoform Finland Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nanoform Finland Plc 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 Nanoform Finland. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nanoform Finland Plc has no effect on the direction of Ford i.e., Ford and Nanoform Finland go up and down completely randomly.
Pair Corralation between Ford and Nanoform Finland
Taking into account the 90-day investment horizon Ford is expected to generate 1.66 times less return on investment than Nanoform Finland. But when comparing it to its historical volatility, Ford Motor is 3.23 times less risky than Nanoform Finland. It trades about 0.19 of its potential returns per unit of risk. Nanoform Finland Plc is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 145.00 in Nanoform Finland Plc on August 30, 2024 and sell it today you would earn a total of 15.00 from holding Nanoform Finland Plc or generate 10.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Ford Motor vs. Nanoform Finland Plc
Performance |
| Timeline |
| Ford Motor |
| Nanoform Finland Plc |
Ford and Nanoform Finland Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Nanoform Finland
The main advantage of trading using opposite Ford and Nanoform Finland positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Nanoform Finland 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 Nanoform Finland will offset losses from the drop in Nanoform Finland's long position.The idea behind Ford Motor and Nanoform Finland Plc 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.| Nanoform Finland vs. Spinnova Oy | Nanoform Finland vs. Qt Group Oyj | Nanoform Finland vs. Kempower Oyj | Nanoform Finland vs. Harvia Oyj |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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