Correlation Between Ford and Empresas Tricot
Can any of the company-specific risk be diversified away by investing in both Ford and Empresas Tricot 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 Empresas Tricot into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Empresas Tricot SA, you can compare the effects of market volatilities on Ford and Empresas Tricot 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 Empresas Tricot. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Empresas Tricot.
Diversification Opportunities for Ford and Empresas Tricot
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between Ford and Empresas is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Empresas Tricot SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Empresas Tricot SA 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 Empresas Tricot. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Empresas Tricot SA has no effect on the direction of Ford i.e., Ford and Empresas Tricot go up and down completely randomly.
Pair Corralation between Ford and Empresas Tricot
Taking into account the 90-day investment horizon Ford Motor is expected to generate 10.77 times more return on investment than Empresas Tricot. However, Ford is 10.77 times more volatile than Empresas Tricot SA. It trades about 0.17 of its potential returns per unit of risk. Empresas Tricot SA is currently generating about 0.33 per unit of risk. If you would invest 1,033 in Ford Motor on August 31, 2024 and sell it today you would earn a total of 77.00 from holding Ford Motor or generate 7.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 40.91% |
| Values | Daily Returns |
Ford Motor vs. Empresas Tricot SA
Performance |
| Timeline |
| Ford Motor |
| Empresas Tricot SA |
Ford and Empresas Tricot Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Empresas Tricot
The main advantage of trading using opposite Ford and Empresas Tricot positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Empresas Tricot 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 Empresas Tricot will offset losses from the drop in Empresas Tricot's long position.The idea behind Ford Motor and Empresas Tricot 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.| Empresas Tricot vs. Energia Latina SA | Empresas Tricot vs. Administradora Americana de | Empresas Tricot vs. Embotelladora Andina SA | Empresas Tricot vs. Salfacorp |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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