Correlation Between Ford and Steelcast
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By analyzing existing cross correlation between Ford Motor and Steelcast Limited, you can compare the effects of market volatilities on Ford and Steelcast 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 Steelcast. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Steelcast.
Diversification Opportunities for Ford and Steelcast
Very good diversification
The 3 months correlation between Ford and Steelcast is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Steelcast Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Steelcast Limited 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 Steelcast. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Steelcast Limited has no effect on the direction of Ford i.e., Ford and Steelcast go up and down completely randomly.
Pair Corralation between Ford and Steelcast
Taking into account the 90-day investment horizon Ford is expected to generate 5.19 times less return on investment than Steelcast. But when comparing it to its historical volatility, Ford Motor is 1.03 times less risky than Steelcast. It trades about 0.01 of its potential returns per unit of risk. Steelcast Limited is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 47,332 in Steelcast Limited on August 30, 2024 and sell it today you would earn a total of 32,628 from holding Steelcast Limited or generate 68.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.18% |
| Values | Daily Returns |
Ford Motor vs. Steelcast Limited
Performance |
| Timeline |
| Ford Motor |
| Steelcast Limited |
Ford and Steelcast Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Steelcast
The main advantage of trading using opposite Ford and Steelcast positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Steelcast 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 Steelcast will offset losses from the drop in Steelcast's long position.The idea behind Ford Motor and Steelcast Limited 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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