Correlation Between Ford and CI ONE
Can any of the company-specific risk be diversified away by investing in both Ford and CI ONE 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 CI ONE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and CI ONE North, you can compare the effects of market volatilities on Ford and CI ONE 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 CI ONE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and CI ONE.
Diversification Opportunities for Ford and CI ONE
Good diversification
The 3 months correlation between Ford and ONEB is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and CI ONE North in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CI ONE North 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 CI ONE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CI ONE North has no effect on the direction of Ford i.e., Ford and CI ONE go up and down completely randomly.
Pair Corralation between Ford and CI ONE
Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the CI ONE. In addition to that, Ford is 6.4 times more volatile than CI ONE North. It trades about -0.18 of its total potential returns per unit of risk. CI ONE North is currently generating about 0.16 per unit of volatility. If you would invest 4,933 in CI ONE North on September 13, 2024 and sell it today you would earn a total of 42.00 from holding CI ONE North or generate 0.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Ford Motor vs. CI ONE North
Performance |
| Timeline |
| Ford Motor |
| CI ONE North |
Ford and CI ONE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and CI ONE
The main advantage of trading using opposite Ford and CI ONE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, CI ONE 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 CI ONE will offset losses from the drop in CI ONE's long position.The idea behind Ford Motor and CI ONE North 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.| CI ONE vs. CI ONE Global | CI ONE vs. CI Yield Enhanced | CI ONE vs. CI MidCap Dividend | CI ONE vs. CI Canadian Short Term |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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