Correlation Between Ford and AURUBIS AG
Can any of the company-specific risk be diversified away by investing in both Ford and AURUBIS AG 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 AURUBIS AG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and AURUBIS AG UNSPADR, you can compare the effects of market volatilities on Ford and AURUBIS AG 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 AURUBIS AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and AURUBIS AG.
Diversification Opportunities for Ford and AURUBIS AG
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Ford and AURUBIS is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and AURUBIS AG UNSPADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AURUBIS AG UNSPADR 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 AURUBIS AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AURUBIS AG UNSPADR has no effect on the direction of Ford i.e., Ford and AURUBIS AG go up and down completely randomly.
Pair Corralation between Ford and AURUBIS AG
Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the AURUBIS AG. But the stock apears to be less risky and, when comparing its historical volatility, Ford Motor is 1.45 times less risky than AURUBIS AG. The stock trades about -0.02 of its potential returns per unit of risk. The AURUBIS AG UNSPADR is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 3,380 in AURUBIS AG UNSPADR on September 14, 2024 and sell it today you would earn a total of 660.00 from holding AURUBIS AG UNSPADR or generate 19.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 97.67% |
| Values | Daily Returns |
Ford Motor vs. AURUBIS AG UNSPADR
Performance |
| Timeline |
| Ford Motor |
| AURUBIS AG UNSPADR |
Ford and AURUBIS AG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and AURUBIS AG
The main advantage of trading using opposite Ford and AURUBIS AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, AURUBIS AG 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 AURUBIS AG will offset losses from the drop in AURUBIS AG's long position.The idea behind Ford Motor and AURUBIS AG UNSPADR 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.| AURUBIS AG vs. MUTUIONLINE | AURUBIS AG vs. CODERE ONLINE LUX | AURUBIS AG vs. SALESFORCE INC CDR | AURUBIS AG vs. ATRYS HEALTH SA |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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