Correlation Between Ford and CubeSmart
Can any of the company-specific risk be diversified away by investing in both Ford and CubeSmart 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 CubeSmart into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and CubeSmart, you can compare the effects of market volatilities on Ford and CubeSmart 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 CubeSmart. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and CubeSmart.
Diversification Opportunities for Ford and CubeSmart
Good diversification
The 3 months correlation between Ford and CubeSmart is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and CubeSmart in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CubeSmart 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 CubeSmart. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CubeSmart has no effect on the direction of Ford i.e., Ford and CubeSmart go up and down completely randomly.
Pair Corralation between Ford and CubeSmart
Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the CubeSmart. In addition to that, Ford is 1.99 times more volatile than CubeSmart. It trades about 0.0 of its total potential returns per unit of risk. CubeSmart is currently generating about 0.24 per unit of volatility. If you would invest 4,405 in CubeSmart on August 29, 2024 and sell it today you would earn a total of 327.00 from holding CubeSmart or generate 7.42% 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. CubeSmart
Performance |
| Timeline |
| Ford Motor |
| CubeSmart |
Ford and CubeSmart Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and CubeSmart
The main advantage of trading using opposite Ford and CubeSmart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, CubeSmart 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 CubeSmart will offset losses from the drop in CubeSmart's long position.The idea behind Ford Motor and CubeSmart 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.| CubeSmart vs. Superior Plus Corp | CubeSmart vs. Origin Agritech | CubeSmart vs. Identiv | CubeSmart vs. INTUITIVE SURGICAL |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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