Correlation Between Ford and Team Precision
Can any of the company-specific risk be diversified away by investing in both Ford and Team Precision 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 Team Precision into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Team Precision Public, you can compare the effects of market volatilities on Ford and Team Precision 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 Team Precision. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Team Precision.
Diversification Opportunities for Ford and Team Precision
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ford and Team is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Team Precision Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Team Precision Public 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 Team Precision. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Team Precision Public has no effect on the direction of Ford i.e., Ford and Team Precision go up and down completely randomly.
Pair Corralation between Ford and Team Precision
Taking into account the 90-day investment horizon Ford is expected to generate 73.5 times less return on investment than Team Precision. But when comparing it to its historical volatility, Ford Motor is 19.95 times less risky than Team Precision. It trades about 0.01 of its potential returns per unit of risk. Team Precision Public is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 827.00 in Team Precision Public on September 2, 2024 and sell it today you would lose (553.00) from holding Team Precision Public or give up 66.87% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 97.38% |
| Values | Daily Returns |
Ford Motor vs. Team Precision Public
Performance |
| Timeline |
| Ford Motor |
| Team Precision Public |
Ford and Team Precision Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Team Precision
The main advantage of trading using opposite Ford and Team Precision positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Team Precision 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 Team Precision will offset losses from the drop in Team Precision's long position.The idea behind Ford Motor and Team Precision Public 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.| Team Precision vs. AP Public | Team Precision vs. Jasmine International Public | Team Precision vs. Asia Plus Group | Team Precision vs. Bangchak Public |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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