Correlation Between Ford and Amg Southernsun
Can any of the company-specific risk be diversified away by investing in both Ford and Amg Southernsun 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 Amg Southernsun into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Amg Southernsun Small, you can compare the effects of market volatilities on Ford and Amg Southernsun 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 Amg Southernsun. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Amg Southernsun.
Diversification Opportunities for Ford and Amg Southernsun
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Ford and Amg is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Amg Southernsun Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amg Southernsun Small 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 Amg Southernsun. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amg Southernsun Small has no effect on the direction of Ford i.e., Ford and Amg Southernsun go up and down completely randomly.
Pair Corralation between Ford and Amg Southernsun
Taking into account the 90-day investment horizon Ford Motor is expected to generate 1.68 times more return on investment than Amg Southernsun. However, Ford is 1.68 times more volatile than Amg Southernsun Small. It trades about 0.01 of its potential returns per unit of risk. Amg Southernsun Small is currently generating about 0.02 per unit of risk. If you would invest 1,073 in Ford Motor on August 31, 2024 and sell it today you would earn a total of 40.00 from holding Ford Motor or generate 3.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.79% |
| Values | Daily Returns |
Ford Motor vs. Amg Southernsun Small
Performance |
| Timeline |
| Ford Motor |
| Amg Southernsun Small |
Ford and Amg Southernsun Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Amg Southernsun
The main advantage of trading using opposite Ford and Amg Southernsun positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Amg Southernsun 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 Amg Southernsun will offset losses from the drop in Amg Southernsun's long position.The idea behind Ford Motor and Amg Southernsun Small 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.| Amg Southernsun vs. Vanguard Small Cap Index | Amg Southernsun vs. T Rowe Price | Amg Southernsun vs. HUMANA INC | Amg Southernsun vs. SCOR PK |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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