Correlation Between Ford and Podravka Prehrambena
Can any of the company-specific risk be diversified away by investing in both Ford and Podravka Prehrambena 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 Podravka Prehrambena into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Podravka Prehrambena Industrija, you can compare the effects of market volatilities on Ford and Podravka Prehrambena 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 Podravka Prehrambena. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Podravka Prehrambena.
Diversification Opportunities for Ford and Podravka Prehrambena
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Ford and Podravka is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Podravka Prehrambena Industrij in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Podravka Prehrambena 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 Podravka Prehrambena. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Podravka Prehrambena has no effect on the direction of Ford i.e., Ford and Podravka Prehrambena go up and down completely randomly.
Pair Corralation between Ford and Podravka Prehrambena
Taking into account the 90-day investment horizon Ford is expected to generate 2.69 times less return on investment than Podravka Prehrambena. In addition to that, Ford is 1.62 times more volatile than Podravka Prehrambena Industrija. It trades about 0.02 of its total potential returns per unit of risk. Podravka Prehrambena Industrija is currently generating about 0.09 per unit of volatility. If you would invest 8,436 in Podravka Prehrambena Industrija on September 14, 2024 and sell it today you would earn a total of 6,114 from holding Podravka Prehrambena Industrija or generate 72.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 97.98% |
| Values | Daily Returns |
Ford Motor vs. Podravka Prehrambena Industrij
Performance |
| Timeline |
| Ford Motor |
| Podravka Prehrambena |
Ford and Podravka Prehrambena Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Podravka Prehrambena
The main advantage of trading using opposite Ford and Podravka Prehrambena positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Podravka Prehrambena 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 Podravka Prehrambena will offset losses from the drop in Podravka Prehrambena's long position.The idea behind Ford Motor and Podravka Prehrambena Industrija 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.| Podravka Prehrambena vs. AD Plastik dd | Podravka Prehrambena vs. Hrvatska Postanska Banka | Podravka Prehrambena vs. Dalekovod dd | Podravka Prehrambena vs. Adris Grupa dd |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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