Correlation Between Ford and Oriental Petroleum
Can any of the company-specific risk be diversified away by investing in both Ford and Oriental Petroleum 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 Oriental Petroleum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Oriental Petroleum and, you can compare the effects of market volatilities on Ford and Oriental Petroleum 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 Oriental Petroleum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Oriental Petroleum.
Diversification Opportunities for Ford and Oriental Petroleum
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between Ford and Oriental is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Oriental Petroleum and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oriental Petroleum and 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 Oriental Petroleum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oriental Petroleum and has no effect on the direction of Ford i.e., Ford and Oriental Petroleum go up and down completely randomly.
Pair Corralation between Ford and Oriental Petroleum
Taking into account the 90-day investment horizon Ford Motor is expected to generate 0.54 times more return on investment than Oriental Petroleum. However, Ford Motor is 1.85 times less risky than Oriental Petroleum. It trades about 0.01 of its potential returns per unit of risk. Oriental Petroleum and is currently generating about -0.03 per unit of risk. If you would invest 1,148 in Ford Motor on September 3, 2024 and sell it today you would lose (50.00) from holding Ford Motor or give up 4.36% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 31.11% |
| Values | Daily Returns |
Ford Motor vs. Oriental Petroleum and
Performance |
| Timeline |
| Ford Motor |
| Oriental Petroleum and |
Ford and Oriental Petroleum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Oriental Petroleum
The main advantage of trading using opposite Ford and Oriental Petroleum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Oriental Petroleum 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 Oriental Petroleum will offset losses from the drop in Oriental Petroleum's long position.| Ford vs. GreenPower Motor | Ford vs. ZEEKR Intelligent Technology | Ford vs. Volcon Inc | Ford vs. Ford Motor |
| Oriental Petroleum vs. Basic Energy Corp | Oriental Petroleum vs. GT Capital Holdings | Oriental Petroleum vs. Allhome Corp | Oriental Petroleum vs. Jollibee Foods Corp |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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