Correlation Between Ford and LOWES
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By analyzing existing cross correlation between Ford Motor and LOWES INC 37, you can compare the effects of market volatilities on Ford and LOWES 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 LOWES. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and LOWES.
Diversification Opportunities for Ford and LOWES
Very good diversification
The 3 months correlation between Ford and LOWES is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and LOWES INC 37 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LOWES INC 37 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 LOWES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LOWES INC 37 has no effect on the direction of Ford i.e., Ford and LOWES go up and down completely randomly.
Pair Corralation between Ford and LOWES
Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the LOWES. In addition to that, Ford is 1.77 times more volatile than LOWES INC 37. It trades about -0.01 of its total potential returns per unit of risk. LOWES INC 37 is currently generating about 0.01 per unit of volatility. If you would invest 7,608 in LOWES INC 37 on September 12, 2024 and sell it today you would lose (26.00) from holding LOWES INC 37 or give up 0.34% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 91.42% |
| Values | Daily Returns |
Ford Motor vs. LOWES INC 37
Performance |
| Timeline |
| Ford Motor |
| LOWES INC 37 |
Ford and LOWES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and LOWES
The main advantage of trading using opposite Ford and LOWES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, LOWES 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 LOWES will offset losses from the drop in LOWES's long position.The idea behind Ford Motor and LOWES INC 37 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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