Correlation Between Ford and Ocular Therapeutix
Can any of the company-specific risk be diversified away by investing in both Ford and Ocular Therapeutix 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 Ocular Therapeutix into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Ocular Therapeutix, you can compare the effects of market volatilities on Ford and Ocular Therapeutix 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 Ocular Therapeutix. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Ocular Therapeutix.
Diversification Opportunities for Ford and Ocular Therapeutix
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Ford and Ocular is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Ocular Therapeutix in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ocular Therapeutix 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 Ocular Therapeutix. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ocular Therapeutix has no effect on the direction of Ford i.e., Ford and Ocular Therapeutix go up and down completely randomly.
Pair Corralation between Ford and Ocular Therapeutix
Taking into account the 90-day investment horizon Ford Motor is expected to generate 0.83 times more return on investment than Ocular Therapeutix. However, Ford Motor is 1.21 times less risky than Ocular Therapeutix. It trades about 0.04 of its potential returns per unit of risk. Ocular Therapeutix is currently generating about -0.3 per unit of risk. If you would invest 1,122 in Ford Motor on August 28, 2024 and sell it today you would earn a total of 18.00 from holding Ford Motor or generate 1.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ford Motor vs. Ocular Therapeutix
Performance |
| Timeline |
| Ford Motor |
| Ocular Therapeutix |
Ford and Ocular Therapeutix Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Ocular Therapeutix
The main advantage of trading using opposite Ford and Ocular Therapeutix positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Ocular Therapeutix 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 Ocular Therapeutix will offset losses from the drop in Ocular Therapeutix's long position.The idea behind Ford Motor and Ocular Therapeutix 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.| Ocular Therapeutix vs. CytomX Therapeutics | Ocular Therapeutix vs. Assembly Biosciences | Ocular Therapeutix vs. Spero Therapeutics | Ocular Therapeutix vs. Achilles Therapeutics PLC |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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