Correlation Between Ford and Otovo AS
Can any of the company-specific risk be diversified away by investing in both Ford and Otovo AS 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 Otovo AS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Otovo AS, you can compare the effects of market volatilities on Ford and Otovo AS 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 Otovo AS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Otovo AS.
Diversification Opportunities for Ford and Otovo AS
Significant diversification
The 3 months correlation between Ford and Otovo is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Otovo AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Otovo AS 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 Otovo AS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Otovo AS has no effect on the direction of Ford i.e., Ford and Otovo AS go up and down completely randomly.
Pair Corralation between Ford and Otovo AS
Taking into account the 90-day investment horizon Ford Motor is expected to generate 0.46 times more return on investment than Otovo AS. However, Ford Motor is 2.19 times less risky than Otovo AS. It trades about 0.01 of its potential returns per unit of risk. Otovo AS is currently generating about -0.1 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 Together |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Ford Motor vs. Otovo AS
Performance |
| Timeline |
| Ford Motor |
| Otovo AS |
Ford and Otovo AS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Otovo AS
The main advantage of trading using opposite Ford and Otovo AS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Otovo AS 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 Otovo AS will offset losses from the drop in Otovo AS's long position.| Ford vs. GreenPower Motor | Ford vs. ZEEKR Intelligent Technology | Ford vs. Volcon Inc | Ford vs. Ford Motor |
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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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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