Correlation Between Ford and Pointsbet Holdings
Can any of the company-specific risk be diversified away by investing in both Ford and Pointsbet Holdings 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 Pointsbet Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Pointsbet Holdings, you can compare the effects of market volatilities on Ford and Pointsbet Holdings 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 Pointsbet Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Pointsbet Holdings.
Diversification Opportunities for Ford and Pointsbet Holdings
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Ford and Pointsbet is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Pointsbet Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pointsbet Holdings 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 Pointsbet Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pointsbet Holdings has no effect on the direction of Ford i.e., Ford and Pointsbet Holdings go up and down completely randomly.
Pair Corralation between Ford and Pointsbet Holdings
Taking into account the 90-day investment horizon Ford is expected to generate 4.7 times less return on investment than Pointsbet Holdings. But when comparing it to its historical volatility, Ford Motor is 1.84 times less risky than Pointsbet Holdings. It trades about 0.18 of its potential returns per unit of risk. Pointsbet Holdings is currently generating about 0.45 of returns per unit of risk over similar time horizon. If you would invest 73.00 in Pointsbet Holdings on August 31, 2024 and sell it today you would earn a total of 31.00 from holding Pointsbet Holdings or generate 42.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ford Motor vs. Pointsbet Holdings
Performance |
| Timeline |
| Ford Motor |
| Pointsbet Holdings |
Ford and Pointsbet Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Pointsbet Holdings
The main advantage of trading using opposite Ford and Pointsbet Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Pointsbet Holdings 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 Pointsbet Holdings will offset losses from the drop in Pointsbet Holdings' long position.The idea behind Ford Motor and Pointsbet Holdings 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.| Pointsbet Holdings vs. Sonic Healthcare | Pointsbet Holdings vs. Autosports Group | Pointsbet Holdings vs. Aspire Mining | Pointsbet Holdings vs. Oceania Healthcare |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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