Correlation Between Ford and TRX Renda
Can any of the company-specific risk be diversified away by investing in both Ford and TRX Renda 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 TRX Renda into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and TRX Renda Fundo, you can compare the effects of market volatilities on Ford and TRX Renda 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 TRX Renda. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and TRX Renda.
Diversification Opportunities for Ford and TRX Renda
Very good diversification
The 3 months correlation between Ford and TRX is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and TRX Renda Fundo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TRX Renda Fundo 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 TRX Renda. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TRX Renda Fundo has no effect on the direction of Ford i.e., Ford and TRX Renda go up and down completely randomly.
Pair Corralation between Ford and TRX Renda
Taking into account the 90-day investment horizon Ford Motor is expected to generate 5.3 times more return on investment than TRX Renda. However, Ford is 5.3 times more volatile than TRX Renda Fundo. It trades about 0.08 of its potential returns per unit of risk. TRX Renda Fundo is currently generating about -0.08 per unit of risk. If you would invest 1,042 in Ford Motor on August 30, 2024 and sell it today you would earn a total of 68.00 from holding Ford Motor or generate 6.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 97.67% |
| Values | Daily Returns |
Ford Motor vs. TRX Renda Fundo
Performance |
| Timeline |
| Ford Motor |
| TRX Renda Fundo |
Ford and TRX Renda Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and TRX Renda
The main advantage of trading using opposite Ford and TRX Renda positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, TRX Renda 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 TRX Renda will offset losses from the drop in TRX Renda's long position.The idea behind Ford Motor and TRX Renda Fundo 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.| TRX Renda vs. Energisa SA | TRX Renda vs. BTG Pactual Logstica | TRX Renda vs. Plano Plano Desenvolvimento | TRX Renda vs. The Procter Gamble |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance |