Correlation Between Ford and Crescent
Can any of the company-specific risk be diversified away by investing in both Ford and Crescent 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 Crescent into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Crescent NV, you can compare the effects of market volatilities on Ford and Crescent 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 Crescent. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Crescent.
Diversification Opportunities for Ford and Crescent
Very good diversification
The 3 months correlation between Ford and Crescent is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Crescent NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crescent NV 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 Crescent. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crescent NV has no effect on the direction of Ford i.e., Ford and Crescent go up and down completely randomly.
Pair Corralation between Ford and Crescent
Taking into account the 90-day investment horizon Ford Motor is expected to generate 0.54 times more return on investment than Crescent. However, Ford Motor is 1.84 times less risky than Crescent. It trades about 0.01 of its potential returns per unit of risk. Crescent NV is currently generating about -0.01 per unit of risk. If you would invest 1,148 in Ford Motor on September 3, 2024 and sell it today you would lose (35.00) from holding Ford Motor or give up 3.05% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.02% |
| Values | Daily Returns |
Ford Motor vs. Crescent NV
Performance |
| Timeline |
| Ford Motor |
| Crescent NV |
Ford and Crescent Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Crescent
The main advantage of trading using opposite Ford and Crescent positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Crescent 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 Crescent will offset losses from the drop in Crescent's long position.| Ford vs. GreenPower Motor | Ford vs. ZEEKR Intelligent Technology | Ford vs. Volcon Inc | Ford vs. Ford Motor |
| Crescent vs. Exmar NV | Crescent vs. Iep Invest | Crescent vs. Unifiedpost Group SA | Crescent vs. Montea CVA |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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