Correlation Between Ford and NATIONAL INVESTMENT
Can any of the company-specific risk be diversified away by investing in both Ford and NATIONAL INVESTMENT 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 NATIONAL INVESTMENT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and NATIONAL INVESTMENT PANY, you can compare the effects of market volatilities on Ford and NATIONAL INVESTMENT 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 NATIONAL INVESTMENT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and NATIONAL INVESTMENT.
Diversification Opportunities for Ford and NATIONAL INVESTMENT
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ford and NATIONAL is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and NATIONAL INVESTMENT PANY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NATIONAL INVESTMENT PANY 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 NATIONAL INVESTMENT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NATIONAL INVESTMENT PANY has no effect on the direction of Ford i.e., Ford and NATIONAL INVESTMENT go up and down completely randomly.
Pair Corralation between Ford and NATIONAL INVESTMENT
Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the NATIONAL INVESTMENT. But the stock apears to be less risky and, when comparing its historical volatility, Ford Motor is 20.69 times less risky than NATIONAL INVESTMENT. The stock trades about 0.0 of its potential returns per unit of risk. The NATIONAL INVESTMENT PANY is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 41,500 in NATIONAL INVESTMENT PANY on August 31, 2024 and sell it today you would earn a total of 27,500 from holding NATIONAL INVESTMENT PANY or generate 66.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.13% |
| Values | Daily Returns |
Ford Motor vs. NATIONAL INVESTMENT PANY
Performance |
| Timeline |
| Ford Motor |
| NATIONAL INVESTMENT PANY |
Ford and NATIONAL INVESTMENT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and NATIONAL INVESTMENT
The main advantage of trading using opposite Ford and NATIONAL INVESTMENT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, NATIONAL INVESTMENT 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 NATIONAL INVESTMENT will offset losses from the drop in NATIONAL INVESTMENT's long position.The idea behind Ford Motor and NATIONAL INVESTMENT PANY 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.| NATIONAL INVESTMENT vs. YETU MICROFINANCE PLC | NATIONAL INVESTMENT vs. AFRIPRISE INVESTMENT PLC | NATIONAL INVESTMENT vs. PRECISION AIR SERVICES | NATIONAL INVESTMENT vs. MKOMBOZI MERCIAL BANK |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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