Correlation Between Ford and Sampo Oyj
Can any of the company-specific risk be diversified away by investing in both Ford and Sampo Oyj 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 Sampo Oyj into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Sampo Oyj A, you can compare the effects of market volatilities on Ford and Sampo Oyj 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 Sampo Oyj. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Sampo Oyj.
Diversification Opportunities for Ford and Sampo Oyj
Very good diversification
The 3 months correlation between Ford and Sampo is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Sampo Oyj A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sampo Oyj A 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 Sampo Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sampo Oyj A has no effect on the direction of Ford i.e., Ford and Sampo Oyj go up and down completely randomly.
Pair Corralation between Ford and Sampo Oyj
Taking into account the 90-day investment horizon Ford Motor is expected to generate 2.23 times more return on investment than Sampo Oyj. However, Ford is 2.23 times more volatile than Sampo Oyj A. It trades about 0.02 of its potential returns per unit of risk. Sampo Oyj A is currently generating about 0.04 per unit of risk. If you would invest 1,095 in Ford Motor on August 28, 2024 and sell it today you would earn a total of 45.00 from holding Ford Motor or generate 4.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.52% |
| Values | Daily Returns |
Ford Motor vs. Sampo Oyj A
Performance |
| Timeline |
| Ford Motor |
| Sampo Oyj A |
Ford and Sampo Oyj Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Sampo Oyj
The main advantage of trading using opposite Ford and Sampo Oyj positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Sampo Oyj 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 Sampo Oyj will offset losses from the drop in Sampo Oyj's long position.The idea behind Ford Motor and Sampo Oyj A 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.| Sampo Oyj vs. Nordea Bank Abp | Sampo Oyj vs. Fortum Oyj | Sampo Oyj vs. UPM Kymmene Oyj | Sampo Oyj vs. Neste Oil Oyj |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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