Correlation Between Ford and OSRAM LICHT
Can any of the company-specific risk be diversified away by investing in both Ford and OSRAM LICHT 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 OSRAM LICHT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and OSRAM LICHT N, you can compare the effects of market volatilities on Ford and OSRAM LICHT 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 OSRAM LICHT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and OSRAM LICHT.
Diversification Opportunities for Ford and OSRAM LICHT
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Ford and OSRAM is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and OSRAM LICHT N in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OSRAM LICHT N 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 OSRAM LICHT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OSRAM LICHT N has no effect on the direction of Ford i.e., Ford and OSRAM LICHT go up and down completely randomly.
Pair Corralation between Ford and OSRAM LICHT
Taking into account the 90-day investment horizon Ford Motor is expected to generate 8.86 times more return on investment than OSRAM LICHT. However, Ford is 8.86 times more volatile than OSRAM LICHT N. It trades about 0.08 of its potential returns per unit of risk. OSRAM LICHT N is currently generating about 0.17 per unit of risk. If you would invest 992.00 in Ford Motor on November 7, 2024 and sell it today you would earn a total of 24.00 from holding Ford Motor or generate 2.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 90.91% |
| Values | Daily Returns |
Ford Motor vs. OSRAM LICHT N
Performance |
| Timeline |
| Ford Motor |
| OSRAM LICHT N |
Ford and OSRAM LICHT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and OSRAM LICHT
The main advantage of trading using opposite Ford and OSRAM LICHT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, OSRAM LICHT 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 OSRAM LICHT will offset losses from the drop in OSRAM LICHT's long position.The idea behind Ford Motor and OSRAM LICHT N 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.| OSRAM LICHT vs. BII Railway Transportation | OSRAM LICHT vs. Gaztransport Technigaz SA | OSRAM LICHT vs. EVS Broadcast Equipment | OSRAM LICHT vs. Kaufman Broad SA |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
Other Complementary Tools
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope |