Correlation Between Ford and 260543CG6
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By analyzing existing cross correlation between Ford Motor and DOW CHEM 4375, you can compare the effects of market volatilities on Ford and 260543CG6 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 260543CG6. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and 260543CG6.
Diversification Opportunities for Ford and 260543CG6
Very good diversification
The 3 months correlation between Ford and 260543CG6 is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and DOW CHEM 4375 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DOW CHEM 4375 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 260543CG6. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DOW CHEM 4375 has no effect on the direction of Ford i.e., Ford and 260543CG6 go up and down completely randomly.
Pair Corralation between Ford and 260543CG6
Taking into account the 90-day investment horizon Ford is expected to generate 148.48 times less return on investment than 260543CG6. But when comparing it to its historical volatility, Ford Motor is 28.64 times less risky than 260543CG6. It trades about 0.01 of its potential returns per unit of risk. DOW CHEM 4375 is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 8,688 in DOW CHEM 4375 on August 30, 2024 and sell it today you would earn a total of 111.00 from holding DOW CHEM 4375 or generate 1.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 93.74% |
| Values | Daily Returns |
Ford Motor vs. DOW CHEM 4375
Performance |
| Timeline |
| Ford Motor |
| DOW CHEM 4375 |
Ford and 260543CG6 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and 260543CG6
The main advantage of trading using opposite Ford and 260543CG6 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, 260543CG6 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 260543CG6 will offset losses from the drop in 260543CG6's long position.The idea behind Ford Motor and DOW CHEM 4375 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.| 260543CG6 vs. AEP TEX INC | 260543CG6 vs. US BANK NATIONAL | 260543CG6 vs. Nasdaq Inc | 260543CG6 vs. Vertiv Holdings Co |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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