Correlation Between Ford and Third Coast
Can any of the company-specific risk be diversified away by investing in both Ford and Third Coast 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 Third Coast into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Third Coast Bancshares, you can compare the effects of market volatilities on Ford and Third Coast 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 Third Coast. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Third Coast.
Diversification Opportunities for Ford and Third Coast
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Ford and Third is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Third Coast Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Third Coast Bancshares 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 Third Coast. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Third Coast Bancshares has no effect on the direction of Ford i.e., Ford and Third Coast go up and down completely randomly.
Pair Corralation between Ford and Third Coast
Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the Third Coast. In addition to that, Ford is 1.7 times more volatile than Third Coast Bancshares. It trades about 0.0 of its total potential returns per unit of risk. Third Coast Bancshares is currently generating about 0.27 per unit of volatility. If you would invest 3,280 in Third Coast Bancshares on August 29, 2024 and sell it today you would earn a total of 320.00 from holding Third Coast Bancshares or generate 9.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ford Motor vs. Third Coast Bancshares
Performance |
| Timeline |
| Ford Motor |
| Third Coast Bancshares |
Ford and Third Coast Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Third Coast
The main advantage of trading using opposite Ford and Third Coast positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Third Coast 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 Third Coast will offset losses from the drop in Third Coast's long position.The idea behind Ford Motor and Third Coast Bancshares 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.| Third Coast vs. Byline Bancorp | Third Coast vs. Coastal Financial Corp | Third Coast vs. NBT Bancorp | Third Coast vs. Community West Bancshares |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
Other Complementary Tools
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk |