Correlation Between Ford and Pender Growth
Can any of the company-specific risk be diversified away by investing in both Ford and Pender Growth 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 Pender Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Pender Growth, you can compare the effects of market volatilities on Ford and Pender Growth 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 Pender Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Pender Growth.
Diversification Opportunities for Ford and Pender Growth
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between Ford and Pender is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Pender Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pender Growth 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 Pender Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pender Growth has no effect on the direction of Ford i.e., Ford and Pender Growth go up and down completely randomly.
Pair Corralation between Ford and Pender Growth
Taking into account the 90-day investment horizon Ford Motor is expected to generate 1.79 times more return on investment than Pender Growth. However, Ford is 1.79 times more volatile than Pender Growth. It trades about 0.06 of its potential returns per unit of risk. Pender Growth is currently generating about 0.04 per unit of risk. If you would invest 1,064 in Ford Motor on August 28, 2024 and sell it today you would earn a total of 46.00 from holding Ford Motor or generate 4.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 97.67% |
| Values | Daily Returns |
Ford Motor vs. Pender Growth
Performance |
| Timeline |
| Ford Motor |
| Pender Growth |
Ford and Pender Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Pender Growth
The main advantage of trading using opposite Ford and Pender Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Pender Growth 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 Pender Growth will offset losses from the drop in Pender Growth's long position.The idea behind Ford Motor and Pender Growth 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.| Pender Growth vs. NVIDIA CDR | Pender Growth vs. Apple Inc CDR | Pender Growth vs. Microsoft Corp CDR | Pender Growth vs. Amazon CDR |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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