Correlation Between Ford and Omnia Holdings
Can any of the company-specific risk be diversified away by investing in both Ford and Omnia Holdings 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 Omnia Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Omnia Holdings Limited, you can compare the effects of market volatilities on Ford and Omnia Holdings 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 Omnia Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Omnia Holdings.
Diversification Opportunities for Ford and Omnia Holdings
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Ford and Omnia is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Omnia Holdings Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Omnia Holdings 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 Omnia Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Omnia Holdings has no effect on the direction of Ford i.e., Ford and Omnia Holdings go up and down completely randomly.
Pair Corralation between Ford and Omnia Holdings
Taking into account the 90-day investment horizon Ford is expected to generate 3.66 times less return on investment than Omnia Holdings. In addition to that, Ford is 1.69 times more volatile than Omnia Holdings Limited. It trades about 0.03 of its total potential returns per unit of risk. Omnia Holdings Limited is currently generating about 0.19 per unit of volatility. If you would invest 632,300 in Omnia Holdings Limited on September 3, 2024 and sell it today you would earn a total of 96,800 from holding Omnia Holdings Limited or generate 15.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ford Motor vs. Omnia Holdings Limited
Performance |
| Timeline |
| Ford Motor |
| Omnia Holdings |
Ford and Omnia Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Omnia Holdings
The main advantage of trading using opposite Ford and Omnia Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Omnia Holdings 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 Omnia Holdings will offset losses from the drop in Omnia Holdings' long position.| Ford vs. GreenPower Motor | Ford vs. ZEEKR Intelligent Technology | Ford vs. Volcon Inc | Ford vs. Ford Motor |
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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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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