Correlation Between Ford and Mackenzie TIPS
Can any of the company-specific risk be diversified away by investing in both Ford and Mackenzie TIPS 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 Mackenzie TIPS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Mackenzie TIPS Index, you can compare the effects of market volatilities on Ford and Mackenzie TIPS 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 Mackenzie TIPS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Mackenzie TIPS.
Diversification Opportunities for Ford and Mackenzie TIPS
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ford and Mackenzie is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Mackenzie TIPS Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mackenzie TIPS Index 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 Mackenzie TIPS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mackenzie TIPS Index has no effect on the direction of Ford i.e., Ford and Mackenzie TIPS go up and down completely randomly.
Pair Corralation between Ford and Mackenzie TIPS
Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the Mackenzie TIPS. In addition to that, Ford is 10.33 times more volatile than Mackenzie TIPS Index. It trades about 0.0 of its total potential returns per unit of risk. Mackenzie TIPS Index is currently generating about -0.04 per unit of volatility. If you would invest 8,445 in Mackenzie TIPS Index on August 29, 2024 and sell it today you would lose (19.00) from holding Mackenzie TIPS Index or give up 0.22% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ford Motor vs. Mackenzie TIPS Index
Performance |
| Timeline |
| Ford Motor |
| Mackenzie TIPS Index |
Ford and Mackenzie TIPS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Mackenzie TIPS
The main advantage of trading using opposite Ford and Mackenzie TIPS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Mackenzie TIPS 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 Mackenzie TIPS will offset losses from the drop in Mackenzie TIPS's long position.The idea behind Ford Motor and Mackenzie TIPS Index 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.| Mackenzie TIPS vs. Mackenzie Developed ex North | Mackenzie TIPS vs. Mackenzie Global Sustainable | Mackenzie TIPS vs. Mackenzie Aggregate Bond | Mackenzie TIPS vs. Mackenzie Canadian Ultra |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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