Correlation Between Ford and 06368LGV2
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By analyzing existing cross correlation between Ford Motor and BMO 5203 01 FEB 28, you can compare the effects of market volatilities on Ford and 06368LGV2 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 06368LGV2. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and 06368LGV2.
Diversification Opportunities for Ford and 06368LGV2
Very good diversification
The 3 months correlation between Ford and 06368LGV2 is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and BMO 5203 01 FEB 28 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BMO 5203 01 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 06368LGV2. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BMO 5203 01 has no effect on the direction of Ford i.e., Ford and 06368LGV2 go up and down completely randomly.
Pair Corralation between Ford and 06368LGV2
Taking into account the 90-day investment horizon Ford Motor is expected to generate 6.6 times more return on investment than 06368LGV2. However, Ford is 6.6 times more volatile than BMO 5203 01 FEB 28. It trades about 0.19 of its potential returns per unit of risk. BMO 5203 01 FEB 28 is currently generating about -0.22 per unit of risk. If you would invest 1,027 in Ford Motor on August 30, 2024 and sell it today you would earn a total of 83.00 from holding Ford Motor or generate 8.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ford Motor vs. BMO 5203 01 FEB 28
Performance |
| Timeline |
| Ford Motor |
| BMO 5203 01 |
Ford and 06368LGV2 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and 06368LGV2
The main advantage of trading using opposite Ford and 06368LGV2 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, 06368LGV2 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 06368LGV2 will offset losses from the drop in 06368LGV2's long position.The idea behind Ford Motor and BMO 5203 01 FEB 28 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.| 06368LGV2 vs. Compania Cervecerias Unidas | 06368LGV2 vs. Eastman Kodak Co | 06368LGV2 vs. Lindblad Expeditions Holdings | 06368LGV2 vs. Anheuser Busch Inbev |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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