Correlation Between Ford and Telecom Argentina
Can any of the company-specific risk be diversified away by investing in both Ford and Telecom Argentina 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 Telecom Argentina into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Telecom Argentina SA, you can compare the effects of market volatilities on Ford and Telecom Argentina 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 Telecom Argentina. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Telecom Argentina.
Diversification Opportunities for Ford and Telecom Argentina
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Ford and Telecom is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Telecom Argentina SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telecom Argentina 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 Telecom Argentina. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Telecom Argentina has no effect on the direction of Ford i.e., Ford and Telecom Argentina go up and down completely randomly.
Pair Corralation between Ford and Telecom Argentina
Taking into account the 90-day investment horizon Ford is expected to generate 26.0 times less return on investment than Telecom Argentina. But when comparing it to its historical volatility, Ford Motor is 1.53 times less risky than Telecom Argentina. It trades about 0.0 of its potential returns per unit of risk. Telecom Argentina SA is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 448.00 in Telecom Argentina SA on August 23, 2024 and sell it today you would earn a total of 837.00 from holding Telecom Argentina SA or generate 186.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ford Motor vs. Telecom Argentina SA
Performance |
| Timeline |
| Ford Motor |
| Telecom Argentina |
Ford and Telecom Argentina Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Telecom Argentina
The main advantage of trading using opposite Ford and Telecom Argentina positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Telecom Argentina 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 Telecom Argentina will offset losses from the drop in Telecom Argentina's long position.The idea behind Ford Motor and Telecom Argentina SA 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.| Telecom Argentina vs. Telefonica SA ADR | Telecom Argentina vs. Orange SA ADR | Telecom Argentina vs. SK Telecom Co | Telecom Argentina vs. America Movil SAB |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
Other Complementary Tools
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Stocks Directory Find actively traded stocks across global markets | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios |