Correlation Between Ford and Erayak Power
Can any of the company-specific risk be diversified away by investing in both Ford and Erayak Power 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 Erayak Power into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Erayak Power Solution, you can compare the effects of market volatilities on Ford and Erayak Power 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 Erayak Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Erayak Power.
Diversification Opportunities for Ford and Erayak Power
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Ford and Erayak is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Erayak Power Solution in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Erayak Power Solution 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 Erayak Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Erayak Power Solution has no effect on the direction of Ford i.e., Ford and Erayak Power go up and down completely randomly.
Pair Corralation between Ford and Erayak Power
Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the Erayak Power. But the stock apears to be less risky and, when comparing its historical volatility, Ford Motor is 2.94 times less risky than Erayak Power. The stock trades about 0.0 of its potential returns per unit of risk. The Erayak Power Solution is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 91.00 in Erayak Power Solution on September 3, 2024 and sell it today you would earn a total of 24.00 from holding Erayak Power Solution or generate 26.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ford Motor vs. Erayak Power Solution
Performance |
| Timeline |
| Ford Motor |
| Erayak Power Solution |
Ford and Erayak Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Erayak Power
The main advantage of trading using opposite Ford and Erayak Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Erayak Power 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 Erayak Power will offset losses from the drop in Erayak Power's long position.| Ford vs. GreenPower Motor | Ford vs. ZEEKR Intelligent Technology | Ford vs. Volcon Inc | Ford vs. Ford Motor |
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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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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