Correlation Between Ford and Takkt AG
Can any of the company-specific risk be diversified away by investing in both Ford and Takkt AG 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 Takkt AG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Takkt AG, you can compare the effects of market volatilities on Ford and Takkt AG 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 Takkt AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Takkt AG.
Diversification Opportunities for Ford and Takkt AG
Very weak diversification
The 3 months correlation between Ford and Takkt is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Takkt AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Takkt AG 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 Takkt AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Takkt AG has no effect on the direction of Ford i.e., Ford and Takkt AG go up and down completely randomly.
Pair Corralation between Ford and Takkt AG
Taking into account the 90-day investment horizon Ford is expected to generate 1.08 times less return on investment than Takkt AG. But when comparing it to its historical volatility, Ford Motor is 1.34 times less risky than Takkt AG. It trades about 0.16 of its potential returns per unit of risk. Takkt AG is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 764.00 in Takkt AG on November 2, 2024 and sell it today you would earn a total of 49.00 from holding Takkt AG or generate 6.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 86.36% |
| Values | Daily Returns |
Ford Motor vs. Takkt AG
Performance |
| Timeline |
| Ford Motor |
| Takkt AG |
Ford and Takkt AG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Takkt AG
The main advantage of trading using opposite Ford and Takkt AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Takkt AG 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 Takkt AG will offset losses from the drop in Takkt AG's long position.The idea behind Ford Motor and Takkt AG 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.| Takkt AG vs. FUJIFILM Holdings | Takkt AG vs. Takkt AG | Takkt AG vs. Superior Plus Corp | Takkt AG vs. Intel |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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