Correlation Between Ford and Expat Romania
Can any of the company-specific risk be diversified away by investing in both Ford and Expat Romania 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 Expat Romania into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Expat Romania BET, you can compare the effects of market volatilities on Ford and Expat Romania 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 Expat Romania. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Expat Romania.
Diversification Opportunities for Ford and Expat Romania
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ford and Expat is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Expat Romania BET in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Expat Romania BET 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 Expat Romania. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Expat Romania BET has no effect on the direction of Ford i.e., Ford and Expat Romania go up and down completely randomly.
Pair Corralation between Ford and Expat Romania
Taking into account the 90-day investment horizon Ford is expected to generate 3.31 times less return on investment than Expat Romania. In addition to that, Ford is 1.77 times more volatile than Expat Romania BET. It trades about 0.01 of its total potential returns per unit of risk. Expat Romania BET is currently generating about 0.05 per unit of volatility. If you would invest 153.00 in Expat Romania BET on September 4, 2024 and sell it today you would earn a total of 50.00 from holding Expat Romania BET or generate 32.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.02% |
| Values | Daily Returns |
Ford Motor vs. Expat Romania BET
Performance |
| Timeline |
| Ford Motor |
| Expat Romania BET |
Ford and Expat Romania Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Expat Romania
The main advantage of trading using opposite Ford and Expat Romania positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Expat Romania 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 Expat Romania will offset losses from the drop in Expat Romania's long position.The idea behind Ford Motor and Expat Romania BET 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.| Expat Romania vs. Expat Czech PX | Expat Romania vs. Expat Croatia Crobex | Expat Romania vs. Expat Serbia Belex15 | Expat Romania vs. Expat Poland WIG20 |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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