Correlation Between Ford and United Tennessee
Can any of the company-specific risk be diversified away by investing in both Ford and United Tennessee 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 United Tennessee into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and United Tennessee Bankshares, you can compare the effects of market volatilities on Ford and United Tennessee 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 United Tennessee. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and United Tennessee.
Diversification Opportunities for Ford and United Tennessee
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ford and United is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and United Tennessee Bankshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Tennessee Ban 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 United Tennessee. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Tennessee Ban has no effect on the direction of Ford i.e., Ford and United Tennessee go up and down completely randomly.
Pair Corralation between Ford and United Tennessee
Taking into account the 90-day investment horizon Ford Motor is expected to generate 0.91 times more return on investment than United Tennessee. However, Ford Motor is 1.1 times less risky than United Tennessee. It trades about 0.0 of its potential returns per unit of risk. United Tennessee Bankshares is currently generating about -0.01 per unit of risk. If you would invest 1,177 in Ford Motor on November 2, 2024 and sell it today you would lose (169.00) from holding Ford Motor or give up 14.36% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 22.47% |
| Values | Daily Returns |
Ford Motor vs. United Tennessee Bankshares
Performance |
| Timeline |
| Ford Motor |
| United Tennessee Ban |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Ford and United Tennessee Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and United Tennessee
The main advantage of trading using opposite Ford and United Tennessee positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, United Tennessee 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 United Tennessee will offset losses from the drop in United Tennessee's long position.The idea behind Ford Motor and United Tennessee Bankshares 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.| United Tennessee vs. United Bancorporation of | United Tennessee vs. Tri County Financial Group | United Tennessee vs. Quaint Oak Bancorp |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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