Correlation Between Ford and Rising Dollar
Can any of the company-specific risk be diversified away by investing in both Ford and Rising Dollar 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 Rising Dollar into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Rising Dollar Profund, you can compare the effects of market volatilities on Ford and Rising Dollar 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 Rising Dollar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Rising Dollar.
Diversification Opportunities for Ford and Rising Dollar
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Ford and Rising is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Rising Dollar Profund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rising Dollar Profund 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 Rising Dollar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rising Dollar Profund has no effect on the direction of Ford i.e., Ford and Rising Dollar go up and down completely randomly.
Pair Corralation between Ford and Rising Dollar
Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the Rising Dollar. In addition to that, Ford is 6.63 times more volatile than Rising Dollar Profund. It trades about 0.0 of its total potential returns per unit of risk. Rising Dollar Profund is currently generating about 0.07 per unit of volatility. If you would invest 2,575 in Rising Dollar Profund on September 2, 2024 and sell it today you would earn a total of 87.00 from holding Rising Dollar Profund or generate 3.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ford Motor vs. Rising Dollar Profund
Performance |
| Timeline |
| Ford Motor |
| Rising Dollar Profund |
Ford and Rising Dollar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Rising Dollar
The main advantage of trading using opposite Ford and Rising Dollar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Rising Dollar 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 Rising Dollar will offset losses from the drop in Rising Dollar's long position.The idea behind Ford Motor and Rising Dollar Profund 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.| Rising Dollar vs. Short Real Estate | Rising Dollar vs. Short Real Estate | Rising Dollar vs. Ultrashort Mid Cap Profund | Rising Dollar vs. Ultrashort Mid Cap Profund |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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