Correlation Between Ford and MDJM
Can any of the company-specific risk be diversified away by investing in both Ford and MDJM 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 MDJM into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and MDJM, you can compare the effects of market volatilities on Ford and MDJM 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 MDJM. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and MDJM.
Diversification Opportunities for Ford and MDJM
Average diversification
The 3 months correlation between Ford and MDJM is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and MDJM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MDJM 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 MDJM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MDJM has no effect on the direction of Ford i.e., Ford and MDJM go up and down completely randomly.
Pair Corralation between Ford and MDJM
Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the MDJM. But the stock apears to be less risky and, when comparing its historical volatility, Ford Motor is 7.61 times less risky than MDJM. The stock trades about -0.15 of its potential returns per unit of risk. The MDJM is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 16.00 in MDJM on October 28, 2024 and sell it today you would earn a total of 1.00 from holding MDJM or generate 6.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ford Motor vs. MDJM
Performance |
| Timeline |
| Ford Motor |
| MDJM |
Ford and MDJM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and MDJM
The main advantage of trading using opposite Ford and MDJM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, MDJM 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 MDJM will offset losses from the drop in MDJM's long position.The idea behind Ford Motor and MDJM 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.| MDJM vs. Nasdaq Inc | MDJM vs. Definitive Healthcare Corp | MDJM vs. SmartStop Self Storage | MDJM vs. Cadence Design Systems |
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 Stocks Directory module to find actively traded stocks across global markets.
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