Correlation Between Ford and Convenience Foods
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By analyzing existing cross correlation between Ford Motor and Convenience Foods PLC, you can compare the effects of market volatilities on Ford and Convenience Foods 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 Convenience Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Convenience Foods.
Diversification Opportunities for Ford and Convenience Foods
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Ford and Convenience is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Convenience Foods PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Convenience Foods PLC 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 Convenience Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Convenience Foods PLC has no effect on the direction of Ford i.e., Ford and Convenience Foods go up and down completely randomly.
Pair Corralation between Ford and Convenience Foods
Taking into account the 90-day investment horizon Ford Motor is expected to generate 1.36 times more return on investment than Convenience Foods. However, Ford is 1.36 times more volatile than Convenience Foods PLC. It trades about 0.25 of its potential returns per unit of risk. Convenience Foods PLC is currently generating about 0.17 per unit of risk. If you would invest 1,008 in Ford Motor on September 2, 2024 and sell it today you would earn a total of 105.00 from holding Ford Motor or generate 10.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Ford Motor vs. Convenience Foods PLC
Performance |
| Timeline |
| Ford Motor |
| Convenience Foods PLC |
Ford and Convenience Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Convenience Foods
The main advantage of trading using opposite Ford and Convenience Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Convenience Foods 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 Convenience Foods will offset losses from the drop in Convenience Foods' long position.The idea behind Ford Motor and Convenience Foods PLC 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.| Convenience Foods vs. Seylan Bank PLC | Convenience Foods vs. Pan Asia Banking | Convenience Foods vs. HDFC Bank of | Convenience Foods vs. DFCC Bank PLC |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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