Correlation Between Ford and INTERNATIONAL
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By analyzing existing cross correlation between Ford Motor and INTERNATIONAL PAPER 435, you can compare the effects of market volatilities on Ford and INTERNATIONAL 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 INTERNATIONAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and INTERNATIONAL.
Diversification Opportunities for Ford and INTERNATIONAL
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ford and INTERNATIONAL is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and INTERNATIONAL PAPER 435 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INTERNATIONAL PAPER 435 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 INTERNATIONAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INTERNATIONAL PAPER 435 has no effect on the direction of Ford i.e., Ford and INTERNATIONAL go up and down completely randomly.
Pair Corralation between Ford and INTERNATIONAL
Taking into account the 90-day investment horizon Ford Motor is expected to generate 2.35 times more return on investment than INTERNATIONAL. However, Ford is 2.35 times more volatile than INTERNATIONAL PAPER 435. It trades about 0.01 of its potential returns per unit of risk. INTERNATIONAL PAPER 435 is currently generating about 0.0 per unit of risk. If you would invest 1,119 in Ford Motor on September 3, 2024 and sell it today you would lose (6.00) from holding Ford Motor or give up 0.54% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 65.79% |
| Values | Daily Returns |
Ford Motor vs. INTERNATIONAL PAPER 435
Performance |
| Timeline |
| Ford Motor |
| INTERNATIONAL PAPER 435 |
Ford and INTERNATIONAL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and INTERNATIONAL
The main advantage of trading using opposite Ford and INTERNATIONAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, INTERNATIONAL 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 INTERNATIONAL will offset losses from the drop in INTERNATIONAL's long position.The idea behind Ford Motor and INTERNATIONAL PAPER 435 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.| INTERNATIONAL vs. Getty Realty | INTERNATIONAL vs. Olympic Steel | INTERNATIONAL vs. Acme United | INTERNATIONAL vs. National Vision Holdings |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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