Correlation Between Ford and Upwork
Can any of the company-specific risk be diversified away by investing in both Ford and Upwork 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 Upwork into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Upwork Inc, you can compare the effects of market volatilities on Ford and Upwork 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 Upwork. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Upwork.
Diversification Opportunities for Ford and Upwork
Very weak diversification
The 3 months correlation between Ford and Upwork is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Upwork Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Upwork Inc 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 Upwork. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Upwork Inc has no effect on the direction of Ford i.e., Ford and Upwork go up and down completely randomly.
Pair Corralation between Ford and Upwork
Taking into account the 90-day investment horizon Ford is expected to generate 2.45 times less return on investment than Upwork. But when comparing it to its historical volatility, Ford Motor is 1.69 times less risky than Upwork. It trades about 0.23 of its potential returns per unit of risk. Upwork Inc is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest 1,356 in Upwork Inc on September 1, 2024 and sell it today you would earn a total of 341.00 from holding Upwork Inc or generate 25.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ford Motor vs. Upwork Inc
Performance |
| Timeline |
| Ford Motor |
| Upwork Inc |
Ford and Upwork Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Upwork
The main advantage of trading using opposite Ford and Upwork positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Upwork 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 Upwork will offset losses from the drop in Upwork's long position.The idea behind Ford Motor and Upwork Inc 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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