Correlation Between Ford and Clearbridge International
Can any of the company-specific risk be diversified away by investing in both Ford and Clearbridge International 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 Clearbridge International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Clearbridge International Value, you can compare the effects of market volatilities on Ford and Clearbridge International 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 Clearbridge International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Clearbridge International.
Diversification Opportunities for Ford and Clearbridge International
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ford and Clearbridge is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Clearbridge International Valu in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clearbridge International 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 Clearbridge International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clearbridge International has no effect on the direction of Ford i.e., Ford and Clearbridge International go up and down completely randomly.
Pair Corralation between Ford and Clearbridge International
Taking into account the 90-day investment horizon Ford Motor is expected to generate 2.24 times more return on investment than Clearbridge International. However, Ford is 2.24 times more volatile than Clearbridge International Value. It trades about 0.03 of its potential returns per unit of risk. Clearbridge International Value is currently generating about -0.06 per unit of risk. If you would invest 1,083 in Ford Motor on September 2, 2024 and sell it today you would earn a total of 30.00 from holding Ford Motor or generate 2.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ford Motor vs. Clearbridge International Valu
Performance |
| Timeline |
| Ford Motor |
| Clearbridge International |
Ford and Clearbridge International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Clearbridge International
The main advantage of trading using opposite Ford and Clearbridge International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Clearbridge International 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 Clearbridge International will offset losses from the drop in Clearbridge International's long position.The idea behind Ford Motor and Clearbridge International Value 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.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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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