Correlation Between Ford and Suominen Oyj
Can any of the company-specific risk be diversified away by investing in both Ford and Suominen Oyj 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 Suominen Oyj into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Suominen Oyj, you can compare the effects of market volatilities on Ford and Suominen Oyj 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 Suominen Oyj. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Suominen Oyj.
Diversification Opportunities for Ford and Suominen Oyj
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ford and Suominen is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Suominen Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Suominen Oyj 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 Suominen Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Suominen Oyj has no effect on the direction of Ford i.e., Ford and Suominen Oyj go up and down completely randomly.
Pair Corralation between Ford and Suominen Oyj
Taking into account the 90-day investment horizon Ford Motor is expected to generate 1.02 times more return on investment than Suominen Oyj. However, Ford is 1.02 times more volatile than Suominen Oyj. It trades about 0.02 of its potential returns per unit of risk. Suominen Oyj is currently generating about -0.02 per unit of risk. If you would invest 957.00 in Ford Motor on September 12, 2024 and sell it today you would earn a total of 99.00 from holding Ford Motor or generate 10.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Ford Motor vs. Suominen Oyj
Performance |
| Timeline |
| Ford Motor |
| Suominen Oyj |
Ford and Suominen Oyj Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Suominen Oyj
The main advantage of trading using opposite Ford and Suominen Oyj positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Suominen Oyj 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 Suominen Oyj will offset losses from the drop in Suominen Oyj's long position.The idea behind Ford Motor and Suominen Oyj 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.| Suominen Oyj vs. Tokmanni Group Oyj | Suominen Oyj vs. Kemira Oyj | Suominen Oyj vs. Telia Company AB | Suominen Oyj vs. Outokumpu Oyj |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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