Correlation Between Ford and PB Bankshares
Can any of the company-specific risk be diversified away by investing in both Ford and PB Bankshares 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 PB Bankshares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and PB Bankshares, you can compare the effects of market volatilities on Ford and PB Bankshares 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 PB Bankshares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and PB Bankshares.
Diversification Opportunities for Ford and PB Bankshares
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ford and PBBK is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and PB Bankshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PB Bankshares 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 PB Bankshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PB Bankshares has no effect on the direction of Ford i.e., Ford and PB Bankshares go up and down completely randomly.
Pair Corralation between Ford and PB Bankshares
Taking into account the 90-day investment horizon Ford Motor is expected to generate 2.34 times more return on investment than PB Bankshares. However, Ford is 2.34 times more volatile than PB Bankshares. It trades about 0.25 of its potential returns per unit of risk. PB Bankshares is currently generating about -0.29 per unit of risk. If you would invest 1,008 in Ford Motor on September 2, 2024 and sell it today you would earn a total of 105.00 from holding Ford Motor or generate 10.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ford Motor vs. PB Bankshares
Performance |
| Timeline |
| Ford Motor |
| PB Bankshares |
Ford and PB Bankshares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and PB Bankshares
The main advantage of trading using opposite Ford and PB Bankshares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, PB Bankshares 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 PB Bankshares will offset losses from the drop in PB Bankshares' long position.The idea behind Ford Motor and PB Bankshares 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.| PB Bankshares vs. Nmb Financial Corp | PB Bankshares vs. Japan Post Holdings | PB Bankshares vs. Bank Utica Ny | PB Bankshares vs. Auburn Bancorp |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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