Correlation Between Ford and OMX Helsinki
Can any of the company-specific risk be diversified away by investing in both Ford and OMX Helsinki 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 OMX Helsinki into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and OMX Helsinki All, you can compare the effects of market volatilities on Ford and OMX Helsinki 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 OMX Helsinki. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and OMX Helsinki.
Diversification Opportunities for Ford and OMX Helsinki
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ford and OMX is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and OMX Helsinki All in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OMX Helsinki All 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 OMX Helsinki. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OMX Helsinki All has no effect on the direction of Ford i.e., Ford and OMX Helsinki go up and down completely randomly.
Pair Corralation between Ford and OMX Helsinki
Taking into account the 90-day investment horizon Ford Motor is expected to generate 2.81 times more return on investment than OMX Helsinki. However, Ford is 2.81 times more volatile than OMX Helsinki All. It trades about 0.0 of its potential returns per unit of risk. OMX Helsinki All is currently generating about -0.02 per unit of risk. If you would invest 1,236 in Ford Motor on August 31, 2024 and sell it today you would lose (123.00) from holding Ford Motor or give up 9.95% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.2% |
| Values | Daily Returns |
Ford Motor vs. OMX Helsinki All
Performance |
| Timeline |
Ford and OMX Helsinki Volatility Contrast
Predicted Return Density |
| Returns |
Ford Motor
Pair trading matchups for Ford
OMX Helsinki All
Pair trading matchups for OMX Helsinki
Pair Trading with Ford and OMX Helsinki
The main advantage of trading using opposite Ford and OMX Helsinki positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, OMX Helsinki 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 OMX Helsinki will offset losses from the drop in OMX Helsinki's long position.The idea behind Ford Motor and OMX Helsinki All 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.| OMX Helsinki vs. Nordea Bank Abp | OMX Helsinki vs. Reka Industrial Oyj | OMX Helsinki vs. United Bankers Oyj | OMX Helsinki vs. HKFoods Oyj A |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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