Correlation Between Ford and Teleflex Incorporated
Can any of the company-specific risk be diversified away by investing in both Ford and Teleflex Incorporated 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 Teleflex Incorporated into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Teleflex Incorporated, you can compare the effects of market volatilities on Ford and Teleflex Incorporated 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 Teleflex Incorporated. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Teleflex Incorporated.
Diversification Opportunities for Ford and Teleflex Incorporated
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ford and Teleflex is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Teleflex Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teleflex Incorporated 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 Teleflex Incorporated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Teleflex Incorporated has no effect on the direction of Ford i.e., Ford and Teleflex Incorporated go up and down completely randomly.
Pair Corralation between Ford and Teleflex Incorporated
Taking into account the 90-day investment horizon Ford Motor is expected to generate 0.91 times more return on investment than Teleflex Incorporated. However, Ford Motor is 1.1 times less risky than Teleflex Incorporated. It trades about 0.03 of its potential returns per unit of risk. Teleflex Incorporated is currently generating about -0.16 per unit of risk. If you would invest 1,083 in Ford Motor on August 31, 2024 and sell it today you would earn a total of 27.00 from holding Ford Motor or generate 2.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ford Motor vs. Teleflex Incorporated
Performance |
| Timeline |
| Ford Motor |
| Teleflex Incorporated |
Ford and Teleflex Incorporated Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Teleflex Incorporated
The main advantage of trading using opposite Ford and Teleflex Incorporated positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Teleflex Incorporated 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 Teleflex Incorporated will offset losses from the drop in Teleflex Incorporated's long position.The idea behind Ford Motor and Teleflex Incorporated 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.| Teleflex Incorporated vs. West Pharmaceutical Services | Teleflex Incorporated vs. Alcon AG | Teleflex Incorporated vs. ResMed Inc | Teleflex Incorporated vs. ICU Medical |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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