Correlation Between Ford and Transamerica Intl
Can any of the company-specific risk be diversified away by investing in both Ford and Transamerica Intl 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 Transamerica Intl into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Transamerica Intl Equity, you can compare the effects of market volatilities on Ford and Transamerica Intl 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 Transamerica Intl. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Transamerica Intl.
Diversification Opportunities for Ford and Transamerica Intl
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ford and Transamerica is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Transamerica Intl Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transamerica Intl Equity 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 Transamerica Intl. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transamerica Intl Equity has no effect on the direction of Ford i.e., Ford and Transamerica Intl go up and down completely randomly.
Pair Corralation between Ford and Transamerica Intl
Taking into account the 90-day investment horizon Ford Motor is expected to generate 2.34 times more return on investment than Transamerica Intl. However, Ford is 2.34 times more volatile than Transamerica Intl Equity. It trades about 0.22 of its potential returns per unit of risk. Transamerica Intl Equity is currently generating about 0.01 per unit of risk. If you would invest 1,022 in Ford Motor on September 3, 2024 and sell it today you would earn a total of 91.00 from holding Ford Motor or generate 8.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ford Motor vs. Transamerica Intl Equity
Performance |
| Timeline |
| Ford Motor |
| Transamerica Intl Equity |
Ford and Transamerica Intl Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Transamerica Intl
The main advantage of trading using opposite Ford and Transamerica Intl positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Transamerica Intl 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 Transamerica Intl will offset losses from the drop in Transamerica Intl's long position.| Ford vs. GreenPower Motor | Ford vs. ZEEKR Intelligent Technology | Ford vs. Volcon Inc | Ford vs. Ford Motor |
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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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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