Correlation Between Ford and ABBOTT
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By analyzing existing cross correlation between Ford Motor and ABBOTT LABS 6, you can compare the effects of market volatilities on Ford and ABBOTT 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 ABBOTT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and ABBOTT.
Diversification Opportunities for Ford and ABBOTT
Very good diversification
The 3 months correlation between Ford and ABBOTT is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and ABBOTT LABS 6 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ABBOTT LABS 6 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 ABBOTT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ABBOTT LABS 6 has no effect on the direction of Ford i.e., Ford and ABBOTT go up and down completely randomly.
Pair Corralation between Ford and ABBOTT
Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the ABBOTT. In addition to that, Ford is 2.33 times more volatile than ABBOTT LABS 6. It trades about 0.0 of its total potential returns per unit of risk. ABBOTT LABS 6 is currently generating about 0.01 per unit of volatility. If you would invest 11,130 in ABBOTT LABS 6 on August 31, 2024 and sell it today you would earn a total of 253.00 from holding ABBOTT LABS 6 or generate 2.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 81.82% |
| Values | Daily Returns |
Ford Motor vs. ABBOTT LABS 6
Performance |
| Timeline |
| Ford Motor |
| ABBOTT LABS 6 |
Ford and ABBOTT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and ABBOTT
The main advantage of trading using opposite Ford and ABBOTT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, ABBOTT 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 ABBOTT will offset losses from the drop in ABBOTT's long position.The idea behind Ford Motor and ABBOTT LABS 6 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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