Correlation Between Ford and TietoEVRY Oyj
Can any of the company-specific risk be diversified away by investing in both Ford and TietoEVRY Oyj 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 TietoEVRY Oyj into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and TietoEVRY Oyj, you can compare the effects of market volatilities on Ford and TietoEVRY Oyj 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 TietoEVRY Oyj. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and TietoEVRY Oyj.
Diversification Opportunities for Ford and TietoEVRY Oyj
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ford and TietoEVRY is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and TietoEVRY Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TietoEVRY Oyj 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 TietoEVRY Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TietoEVRY Oyj has no effect on the direction of Ford i.e., Ford and TietoEVRY Oyj go up and down completely randomly.
Pair Corralation between Ford and TietoEVRY Oyj
Taking into account the 90-day investment horizon Ford Motor is expected to generate 1.5 times more return on investment than TietoEVRY Oyj. However, Ford is 1.5 times more volatile than TietoEVRY Oyj. It trades about 0.0 of its potential returns per unit of risk. TietoEVRY Oyj is currently generating about -0.06 per unit of risk. If you would invest 1,251 in Ford Motor on September 1, 2024 and sell it today you would lose (138.00) from holding Ford Motor or give up 11.03% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.94% |
| Values | Daily Returns |
Ford Motor vs. TietoEVRY Oyj
Performance |
| Timeline |
| Ford Motor |
| TietoEVRY Oyj |
Ford and TietoEVRY Oyj Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and TietoEVRY Oyj
The main advantage of trading using opposite Ford and TietoEVRY Oyj positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, TietoEVRY Oyj 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 TietoEVRY Oyj will offset losses from the drop in TietoEVRY Oyj's long position.The idea behind Ford Motor and TietoEVRY Oyj 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.| TietoEVRY Oyj vs. Xplora Technologies As | TietoEVRY Oyj vs. Jaeren Sparebank | TietoEVRY Oyj vs. Sparebanken Ost | TietoEVRY Oyj vs. Aasen Sparebank |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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