Correlation Between Ford and TEN SQUARE
Can any of the company-specific risk be diversified away by investing in both Ford and TEN SQUARE 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 TEN SQUARE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and TEN SQUARE GAMES, you can compare the effects of market volatilities on Ford and TEN SQUARE 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 TEN SQUARE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and TEN SQUARE.
Diversification Opportunities for Ford and TEN SQUARE
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ford and TEN is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and TEN SQUARE GAMES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TEN SQUARE GAMES 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 TEN SQUARE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TEN SQUARE GAMES has no effect on the direction of Ford i.e., Ford and TEN SQUARE go up and down completely randomly.
Pair Corralation between Ford and TEN SQUARE
Taking into account the 90-day investment horizon Ford Motor is expected to generate 1.08 times more return on investment than TEN SQUARE. However, Ford is 1.08 times more volatile than TEN SQUARE GAMES. It trades about 0.01 of its potential returns per unit of risk. TEN SQUARE GAMES is currently generating about -0.07 per unit of risk. If you would invest 1,122 in Ford Motor on August 27, 2024 and sell it today you would lose (4.00) from holding Ford Motor or give up 0.36% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 90.48% |
| Values | Daily Returns |
Ford Motor vs. TEN SQUARE GAMES
Performance |
| Timeline |
| Ford Motor |
| TEN SQUARE GAMES |
Ford and TEN SQUARE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and TEN SQUARE
The main advantage of trading using opposite Ford and TEN SQUARE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, TEN SQUARE 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 TEN SQUARE will offset losses from the drop in TEN SQUARE's long position.The idea behind Ford Motor and TEN SQUARE GAMES 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.| TEN SQUARE vs. CD PROJEKT SA | TEN SQUARE vs. 11 bit studios | TEN SQUARE vs. Movie Games SA | TEN SQUARE vs. Ultimate Games SA |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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