Correlation Between Ford and ACADIA
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By analyzing existing cross correlation between Ford Motor and ACADIA HEALTHCARE INC, you can compare the effects of market volatilities on Ford and ACADIA 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 ACADIA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and ACADIA.
Diversification Opportunities for Ford and ACADIA
Very good diversification
The 3 months correlation between Ford and ACADIA is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and ACADIA HEALTHCARE INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ACADIA HEALTHCARE 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 ACADIA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ACADIA HEALTHCARE INC has no effect on the direction of Ford i.e., Ford and ACADIA go up and down completely randomly.
Pair Corralation between Ford and ACADIA
Taking into account the 90-day investment horizon Ford Motor is expected to generate 3.67 times more return on investment than ACADIA. However, Ford is 3.67 times more volatile than ACADIA HEALTHCARE INC. It trades about 0.03 of its potential returns per unit of risk. ACADIA HEALTHCARE INC is currently generating about -0.11 per unit of risk. If you would invest 1,083 in Ford Motor on August 31, 2024 and sell it today you would earn a total of 27.00 from holding Ford Motor or generate 2.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Ford Motor vs. ACADIA HEALTHCARE INC
Performance |
| Timeline |
| Ford Motor |
| ACADIA HEALTHCARE INC |
Ford and ACADIA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and ACADIA
The main advantage of trading using opposite Ford and ACADIA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, ACADIA 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 ACADIA will offset losses from the drop in ACADIA's long position.The idea behind Ford Motor and ACADIA HEALTHCARE 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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