Correlation Between Ford and POST TELECOMMU
Can any of the company-specific risk be diversified away by investing in both Ford and POST TELECOMMU 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 POST TELECOMMU into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and POST TELECOMMU, you can compare the effects of market volatilities on Ford and POST TELECOMMU 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 POST TELECOMMU. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and POST TELECOMMU.
Diversification Opportunities for Ford and POST TELECOMMU
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Ford and POST is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and POST TELECOMMU in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on POST TELECOMMU 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 POST TELECOMMU. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of POST TELECOMMU has no effect on the direction of Ford i.e., Ford and POST TELECOMMU go up and down completely randomly.
Pair Corralation between Ford and POST TELECOMMU
Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the POST TELECOMMU. But the stock apears to be less risky and, when comparing its historical volatility, Ford Motor is 1.74 times less risky than POST TELECOMMU. The stock trades about -0.11 of its potential returns per unit of risk. The POST TELECOMMU is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 2,013,331 in POST TELECOMMU on November 6, 2024 and sell it today you would earn a total of 196,669 from holding POST TELECOMMU or generate 9.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 91.53% |
| Values | Daily Returns |
Ford Motor vs. POST TELECOMMU
Performance |
| Timeline |
| Ford Motor |
| POST TELECOMMU |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Modest
Ford and POST TELECOMMU Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and POST TELECOMMU
The main advantage of trading using opposite Ford and POST TELECOMMU positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, POST TELECOMMU 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 POST TELECOMMU will offset losses from the drop in POST TELECOMMU's long position.The idea behind Ford Motor and POST TELECOMMU 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.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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