Correlation Between Ford and Pax Core
Can any of the company-specific risk be diversified away by investing in both Ford and Pax Core 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 Pax Core into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Pax E Bond, you can compare the effects of market volatilities on Ford and Pax Core 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 Pax Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Pax Core.
Diversification Opportunities for Ford and Pax Core
Very good diversification
The 3 months correlation between Ford and Pax is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Pax E Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pax E Bond 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 Pax Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pax E Bond has no effect on the direction of Ford i.e., Ford and Pax Core go up and down completely randomly.
Pair Corralation between Ford and Pax Core
Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the Pax Core. In addition to that, Ford is 7.75 times more volatile than Pax E Bond. It trades about 0.0 of its total potential returns per unit of risk. Pax E Bond is currently generating about 0.08 per unit of volatility. If you would invest 876.00 in Pax E Bond on August 29, 2024 and sell it today you would earn a total of 5.00 from holding Pax E Bond or generate 0.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Ford Motor vs. Pax E Bond
Performance |
| Timeline |
| Ford Motor |
| Pax E Bond |
Ford and Pax Core Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Pax Core
The main advantage of trading using opposite Ford and Pax Core positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Pax Core 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 Pax Core will offset losses from the drop in Pax Core's long position.The idea behind Ford Motor and Pax E Bond 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.| Pax Core vs. Ivy Natural Resources | Pax Core vs. Gmo Resources | Pax Core vs. Clearbridge Energy Mlp | Pax Core vs. Victory Global Natural |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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