Correlation Between Ford and Scandinavian Brake
Can any of the company-specific risk be diversified away by investing in both Ford and Scandinavian Brake 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 Scandinavian Brake into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Scandinavian Brake Systems, you can compare the effects of market volatilities on Ford and Scandinavian Brake 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 Scandinavian Brake. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Scandinavian Brake.
Diversification Opportunities for Ford and Scandinavian Brake
-0.76 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Ford and Scandinavian is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Scandinavian Brake Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scandinavian Brake 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 Scandinavian Brake. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scandinavian Brake has no effect on the direction of Ford i.e., Ford and Scandinavian Brake go up and down completely randomly.
Pair Corralation between Ford and Scandinavian Brake
If you would invest 992.00 in Ford Motor on November 5, 2024 and sell it today you would earn a total of 16.00 from holding Ford Motor or generate 1.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 90.48% |
| Values | Daily Returns |
Ford Motor vs. Scandinavian Brake Systems
Performance |
| Timeline |
| Ford Motor |
| Scandinavian Brake |
Ford and Scandinavian Brake Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Scandinavian Brake
The main advantage of trading using opposite Ford and Scandinavian Brake positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Scandinavian Brake 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 Scandinavian Brake will offset losses from the drop in Scandinavian Brake's long position.The idea behind Ford Motor and Scandinavian Brake Systems 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.| Scandinavian Brake vs. SKAKO AS | Scandinavian Brake vs. Newcap Holding AS | Scandinavian Brake vs. Columbus AS | Scandinavian Brake vs. Rovsing AS |
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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