Correlation Between Ford and Talenom Oyj
Can any of the company-specific risk be diversified away by investing in both Ford and Talenom 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 Talenom 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 Talenom Oyj, you can compare the effects of market volatilities on Ford and Talenom 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 Talenom Oyj. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Talenom Oyj.
Diversification Opportunities for Ford and Talenom Oyj
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Ford and Talenom is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Talenom Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Talenom 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 Talenom Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Talenom Oyj has no effect on the direction of Ford i.e., Ford and Talenom Oyj go up and down completely randomly.
Pair Corralation between Ford and Talenom Oyj
Taking into account the 90-day investment horizon Ford Motor is expected to generate 1.0 times more return on investment than Talenom Oyj. However, Ford is 1.0 times more volatile than Talenom Oyj. It trades about 0.0 of its potential returns per unit of risk. Talenom Oyj is currently generating about -0.07 per unit of risk. If you would invest 1,059 in Ford Motor on January 12, 2025 and sell it today you would lose (126.00) from holding Ford Motor or give up 11.9% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Ford Motor vs. Talenom Oyj
Performance |
| Timeline |
| Ford Motor |
| Talenom Oyj |
Ford and Talenom Oyj Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Talenom Oyj
The main advantage of trading using opposite Ford and Talenom Oyj positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Talenom 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 Talenom Oyj will offset losses from the drop in Talenom Oyj's long position.The idea behind Ford Motor and Talenom 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.| Talenom Oyj vs. Admicom Oyj | Talenom Oyj vs. Vincit Group Oyj | Talenom Oyj vs. Harvia Oyj | Talenom Oyj vs. Remedy Entertainment Oyj |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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