Correlation Between Ford and Starguide
Can any of the company-specific risk be diversified away by investing in both Ford and Starguide 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 Starguide into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Starguide Group, you can compare the effects of market volatilities on Ford and Starguide 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 Starguide. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Starguide.
Diversification Opportunities for Ford and Starguide
Significant diversification
The 3 months correlation between Ford and Starguide is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Starguide Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Starguide Group 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 Starguide. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Starguide Group has no effect on the direction of Ford i.e., Ford and Starguide go up and down completely randomly.
Pair Corralation between Ford and Starguide
Taking into account the 90-day investment horizon Ford is expected to generate 22.59 times less return on investment than Starguide. But when comparing it to its historical volatility, Ford Motor is 26.42 times less risky than Starguide. It trades about 0.22 of its potential returns per unit of risk. Starguide Group is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 5.00 in Starguide Group on September 3, 2024 and sell it today you would earn a total of 5.00 from holding Starguide Group or generate 100.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Ford Motor vs. Starguide Group
Performance |
| Timeline |
| Ford Motor |
| Starguide Group |
Ford and Starguide Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Starguide
The main advantage of trading using opposite Ford and Starguide positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Starguide 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 Starguide will offset losses from the drop in Starguide's long position.| Ford vs. GreenPower Motor | Ford vs. ZEEKR Intelligent Technology | Ford vs. Volcon Inc | Ford vs. Ford Motor |
| Starguide vs. Manaris Corp | Starguide vs. Green Planet Bio | Starguide vs. Continental Beverage Brands | Starguide vs. Opus Magnum Ameris |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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