Correlation Between Ford and Shenkman Floating
Can any of the company-specific risk be diversified away by investing in both Ford and Shenkman Floating 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 Shenkman Floating into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Shenkman Floating Rate, you can compare the effects of market volatilities on Ford and Shenkman Floating 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 Shenkman Floating. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Shenkman Floating.
Diversification Opportunities for Ford and Shenkman Floating
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Ford and Shenkman is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Shenkman Floating Rate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shenkman Floating Rate 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 Shenkman Floating. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shenkman Floating Rate has no effect on the direction of Ford i.e., Ford and Shenkman Floating go up and down completely randomly.
Pair Corralation between Ford and Shenkman Floating
Taking into account the 90-day investment horizon Ford Motor is expected to generate 13.18 times more return on investment than Shenkman Floating. However, Ford is 13.18 times more volatile than Shenkman Floating Rate. It trades about 0.22 of its potential returns per unit of risk. Shenkman Floating Rate is currently generating about 0.07 per unit of risk. If you would invest 1,022 in Ford Motor on September 3, 2024 and sell it today you would earn a total of 91.00 from holding Ford Motor or generate 8.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ford Motor vs. Shenkman Floating Rate
Performance |
| Timeline |
| Ford Motor |
| Shenkman Floating Rate |
Ford and Shenkman Floating Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Shenkman Floating
The main advantage of trading using opposite Ford and Shenkman Floating positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Shenkman Floating 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 Shenkman Floating will offset losses from the drop in Shenkman Floating's long position.| Ford vs. GreenPower Motor | Ford vs. ZEEKR Intelligent Technology | Ford vs. Volcon Inc | Ford vs. Ford Motor |
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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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