Correlation Between Ford and ScandBook Holding
Can any of the company-specific risk be diversified away by investing in both Ford and ScandBook Holding 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 ScandBook Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and ScandBook Holding AB, you can compare the effects of market volatilities on Ford and ScandBook Holding 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 ScandBook Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and ScandBook Holding.
Diversification Opportunities for Ford and ScandBook Holding
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ford and ScandBook is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and ScandBook Holding AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ScandBook 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 ScandBook Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ScandBook Holding has no effect on the direction of Ford i.e., Ford and ScandBook Holding go up and down completely randomly.
Pair Corralation between Ford and ScandBook Holding
Taking into account the 90-day investment horizon Ford Motor is expected to generate 1.28 times more return on investment than ScandBook Holding. However, Ford is 1.28 times more volatile than ScandBook Holding AB. It trades about 0.19 of its potential returns per unit of risk. ScandBook Holding AB is currently generating about -0.19 per unit of risk. If you would invest 1,027 in Ford Motor on August 30, 2024 and sell it today you would earn a total of 83.00 from holding Ford Motor or generate 8.08% 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. ScandBook Holding AB
Performance |
| Timeline |
| Ford Motor |
| ScandBook Holding |
Ford and ScandBook Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and ScandBook Holding
The main advantage of trading using opposite Ford and ScandBook Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, ScandBook Holding 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 ScandBook Holding will offset losses from the drop in ScandBook Holding's long position.The idea behind Ford Motor and ScandBook Holding AB 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.| ScandBook Holding vs. Zinzino AB Series | ScandBook Holding vs. Firefly AB | ScandBook Holding vs. Generic Sweden publ | ScandBook Holding vs. Nepa AB |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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