Correlation Between Ford and Quinenco
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By analyzing existing cross correlation between Ford Motor and Quinenco, you can compare the effects of market volatilities on Ford and Quinenco 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 Quinenco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Quinenco.
Diversification Opportunities for Ford and Quinenco
Good diversification
The 3 months correlation between Ford and Quinenco is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Quinenco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quinenco 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 Quinenco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Quinenco has no effect on the direction of Ford i.e., Ford and Quinenco go up and down completely randomly.
Pair Corralation between Ford and Quinenco
Taking into account the 90-day investment horizon Ford Motor is expected to generate 1.25 times more return on investment than Quinenco. However, Ford is 1.25 times more volatile than Quinenco. It trades about 0.19 of its potential returns per unit of risk. Quinenco is currently generating about -0.14 per unit of risk. If you would invest 1,027 in Ford Motor on August 30, 2024 and sell it today you would earn a total of 83.00 from holding Ford Motor or generate 8.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Ford Motor vs. Quinenco
Performance |
| Timeline |
| Ford Motor |
| Quinenco |
Ford and Quinenco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Quinenco
The main advantage of trading using opposite Ford and Quinenco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Quinenco 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 Quinenco will offset losses from the drop in Quinenco's long position.The idea behind Ford Motor and Quinenco 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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