Correlation Between Ford and National Presto
Can any of the company-specific risk be diversified away by investing in both Ford and National Presto 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 Presto 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 Presto Industries, you can compare the effects of market volatilities on Ford and National Presto 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 Presto. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and National Presto.
Diversification Opportunities for Ford and National Presto
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ford and National is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and National Presto Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Presto Indu 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 Presto. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Presto Indu has no effect on the direction of Ford i.e., Ford and National Presto go up and down completely randomly.
Pair Corralation between Ford and National Presto
Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the National Presto. In addition to that, Ford is 1.43 times more volatile than National Presto Industries. It trades about 0.0 of its total potential returns per unit of risk. National Presto Industries is currently generating about 0.08 per unit of volatility. If you would invest 7,418 in National Presto Industries on August 24, 2024 and sell it today you would earn a total of 234.00 from holding National Presto Industries or generate 3.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ford Motor vs. National Presto Industries
Performance |
| Timeline |
| Ford Motor |
| National Presto Indu |
Ford and National Presto Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and National Presto
The main advantage of trading using opposite Ford and National Presto positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, National Presto 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 Presto will offset losses from the drop in National Presto's long position.The idea behind Ford Motor and National Presto Industries 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 Presto vs. Park Electrochemical | National Presto vs. Ducommun Incorporated | National Presto vs. Innovative Solutions and | National Presto vs. VSE Corporation |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
Other Complementary Tools
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios |