Correlation Between Ford and EQUINOR
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By analyzing existing cross correlation between Ford Motor and EQUINOR ASA, you can compare the effects of market volatilities on Ford and EQUINOR 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 EQUINOR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and EQUINOR.
Diversification Opportunities for Ford and EQUINOR
Very good diversification
The 3 months correlation between Ford and EQUINOR is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and EQUINOR ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EQUINOR ASA 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 EQUINOR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EQUINOR ASA has no effect on the direction of Ford i.e., Ford and EQUINOR go up and down completely randomly.
Pair Corralation between Ford and EQUINOR
Taking into account the 90-day investment horizon Ford Motor is expected to generate 4.4 times more return on investment than EQUINOR. However, Ford is 4.4 times more volatile than EQUINOR ASA. It trades about 0.17 of its potential returns per unit of risk. EQUINOR ASA is currently generating about -0.16 per unit of risk. If you would invest 1,033 in Ford Motor on August 31, 2024 and sell it today you would earn a total of 77.00 from holding Ford Motor or generate 7.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ford Motor vs. EQUINOR ASA
Performance |
| Timeline |
| Ford Motor |
| EQUINOR ASA |
Ford and EQUINOR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and EQUINOR
The main advantage of trading using opposite Ford and EQUINOR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, EQUINOR 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 EQUINOR will offset losses from the drop in EQUINOR's long position.The idea behind Ford Motor and EQUINOR ASA 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.| EQUINOR vs. AEP TEX INC | EQUINOR vs. US BANK NATIONAL | EQUINOR vs. Bank of America | EQUINOR vs. GE Aerospace |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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