Correlation Between Ford and SCE Trust
Can any of the company-specific risk be diversified away by investing in both Ford and SCE Trust 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 SCE Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and SCE Trust VIII, you can compare the effects of market volatilities on Ford and SCE Trust 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 SCE Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and SCE Trust.
Diversification Opportunities for Ford and SCE Trust
Good diversification
The 3 months correlation between Ford and SCE is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and SCE Trust VIII in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SCE Trust VIII 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 SCE Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SCE Trust VIII has no effect on the direction of Ford i.e., Ford and SCE Trust go up and down completely randomly.
Pair Corralation between Ford and SCE Trust
Taking into account the 90-day investment horizon Ford is expected to generate 1.92 times less return on investment than SCE Trust. In addition to that, Ford is 5.1 times more volatile than SCE Trust VIII. It trades about 0.01 of its total potential returns per unit of risk. SCE Trust VIII is currently generating about 0.1 per unit of volatility. If you would invest 2,474 in SCE Trust VIII on September 3, 2024 and sell it today you would earn a total of 152.00 from holding SCE Trust VIII or generate 6.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 30.32% |
| Values | Daily Returns |
Ford Motor vs. SCE Trust VIII
Performance |
| Timeline |
| Ford Motor |
| SCE Trust VIII |
Ford and SCE Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and SCE Trust
The main advantage of trading using opposite Ford and SCE Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, SCE Trust 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 SCE Trust will offset losses from the drop in SCE Trust's long position.| Ford vs. GreenPower Motor | Ford vs. ZEEKR Intelligent Technology | Ford vs. Volcon Inc | Ford vs. Ford Motor |
| SCE Trust vs. Dominion Energy | SCE Trust vs. Consolidated Edison | SCE Trust vs. Eversource Energy | SCE Trust vs. FirstEnergy |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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