Correlation Between Ford and Salmon Evolution
Can any of the company-specific risk be diversified away by investing in both Ford and Salmon Evolution 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 Salmon Evolution into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Salmon Evolution Holding, you can compare the effects of market volatilities on Ford and Salmon Evolution 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 Salmon Evolution. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Salmon Evolution.
Diversification Opportunities for Ford and Salmon Evolution
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Ford and Salmon is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Salmon Evolution Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Salmon Evolution Holding 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 Salmon Evolution. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Salmon Evolution Holding has no effect on the direction of Ford i.e., Ford and Salmon Evolution go up and down completely randomly.
Pair Corralation between Ford and Salmon Evolution
Taking into account the 90-day investment horizon Ford is expected to generate 2.09 times less return on investment than Salmon Evolution. In addition to that, Ford is 1.33 times more volatile than Salmon Evolution Holding. It trades about 0.0 of its total potential returns per unit of risk. Salmon Evolution Holding is currently generating about 0.01 per unit of volatility. If you would invest 650.00 in Salmon Evolution Holding on September 12, 2024 and sell it today you would earn a total of 11.00 from holding Salmon Evolution Holding or generate 1.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.7% |
| Values | Daily Returns |
Ford Motor vs. Salmon Evolution Holding
Performance |
| Timeline |
| Ford Motor |
| Salmon Evolution Holding |
Ford and Salmon Evolution Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Salmon Evolution
The main advantage of trading using opposite Ford and Salmon Evolution positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Salmon Evolution 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 Salmon Evolution will offset losses from the drop in Salmon Evolution's long position.The idea behind Ford Motor and Salmon Evolution Holding 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.| Salmon Evolution vs. SalMar ASA | Salmon Evolution vs. Lery Seafood Group | Salmon Evolution vs. Pf Bakkafrost | Salmon Evolution vs. Grieg Seafood ASA |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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