Correlation Between Ford and Thermal Energy
Can any of the company-specific risk be diversified away by investing in both Ford and Thermal Energy 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 Thermal Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Thermal Energy International, you can compare the effects of market volatilities on Ford and Thermal Energy 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 Thermal Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Thermal Energy.
Diversification Opportunities for Ford and Thermal Energy
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ford and Thermal is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Thermal Energy International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thermal Energy Inter 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 Thermal Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thermal Energy Inter has no effect on the direction of Ford i.e., Ford and Thermal Energy go up and down completely randomly.
Pair Corralation between Ford and Thermal Energy
Taking into account the 90-day investment horizon Ford Motor is expected to generate 0.39 times more return on investment than Thermal Energy. However, Ford Motor is 2.54 times less risky than Thermal Energy. It trades about 0.0 of its potential returns per unit of risk. Thermal Energy International is currently generating about -0.05 per unit of risk. If you would invest 1,048 in Ford Motor on September 12, 2024 and sell it today you would lose (7.00) from holding Ford Motor or give up 0.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.46% |
| Values | Daily Returns |
Ford Motor vs. Thermal Energy International
Performance |
| Timeline |
| Ford Motor |
| Thermal Energy Inter |
Ford and Thermal Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Thermal Energy
The main advantage of trading using opposite Ford and Thermal Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Thermal Energy 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 Thermal Energy will offset losses from the drop in Thermal Energy's long position.The idea behind Ford Motor and Thermal Energy International 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.| Thermal Energy vs. QYOU Media | Thermal Energy vs. LeanLife Health | Thermal Energy vs. Prime Meridian Holding | Thermal Energy vs. TrackX Holdings |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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