Correlation Between Ford and Tubacex SA
Can any of the company-specific risk be diversified away by investing in both Ford and Tubacex SA 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 Tubacex SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Tubacex SA, you can compare the effects of market volatilities on Ford and Tubacex SA 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 Tubacex SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Tubacex SA.
Diversification Opportunities for Ford and Tubacex SA
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Ford and Tubacex is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Tubacex SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tubacex 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 Tubacex SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tubacex SA has no effect on the direction of Ford i.e., Ford and Tubacex SA go up and down completely randomly.
Pair Corralation between Ford and Tubacex SA
Taking into account the 90-day investment horizon Ford Motor is expected to generate 1.28 times more return on investment than Tubacex SA. However, Ford is 1.28 times more volatile than Tubacex SA. It trades about 0.0 of its potential returns per unit of risk. Tubacex SA is currently generating about -0.03 per unit of risk. If you would invest 1,122 in Ford Motor on August 29, 2024 and sell it today you would lose (12.00) from holding Ford Motor or give up 1.07% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ford Motor vs. Tubacex SA
Performance |
| Timeline |
| Ford Motor |
| Tubacex SA |
Ford and Tubacex SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Tubacex SA
The main advantage of trading using opposite Ford and Tubacex SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Tubacex SA 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 Tubacex SA will offset losses from the drop in Tubacex SA's long position.The idea behind Ford Motor and Tubacex 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.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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
Other Complementary Tools
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format |