Correlation Between Ford and Amplify Samsung
Can any of the company-specific risk be diversified away by investing in both Ford and Amplify Samsung 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 Amplify Samsung into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Amplify Samsung SOFR, you can compare the effects of market volatilities on Ford and Amplify Samsung 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 Amplify Samsung. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Amplify Samsung.
Diversification Opportunities for Ford and Amplify Samsung
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Ford and Amplify is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Amplify Samsung SOFR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amplify Samsung SOFR 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 Amplify Samsung. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amplify Samsung SOFR has no effect on the direction of Ford i.e., Ford and Amplify Samsung go up and down completely randomly.
Pair Corralation between Ford and Amplify Samsung
Taking into account the 90-day investment horizon Ford Motor is expected to generate 91.2 times more return on investment than Amplify Samsung. However, Ford is 91.2 times more volatile than Amplify Samsung SOFR. It trades about 0.01 of its potential returns per unit of risk. Amplify Samsung SOFR is currently generating about 0.84 per unit of risk. If you would invest 1,138 in Ford Motor on September 2, 2024 and sell it today you would lose (25.00) from holding Ford Motor or give up 2.2% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 43.75% |
| Values | Daily Returns |
Ford Motor vs. Amplify Samsung SOFR
Performance |
| Timeline |
| Ford Motor |
| Amplify Samsung SOFR |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Market Crasher
Ford and Amplify Samsung Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Amplify Samsung
The main advantage of trading using opposite Ford and Amplify Samsung positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Amplify Samsung 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 Amplify Samsung will offset losses from the drop in Amplify Samsung's long position.The idea behind Ford Motor and Amplify Samsung SOFR 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 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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