Correlation Between Ford and Mercer
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By analyzing existing cross correlation between Ford Motor and Mercer International 55, you can compare the effects of market volatilities on Ford and Mercer 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 Mercer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Mercer.
Diversification Opportunities for Ford and Mercer
Good diversification
The 3 months correlation between Ford and Mercer is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Mercer International 55 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mercer International 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 Mercer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mercer International has no effect on the direction of Ford i.e., Ford and Mercer go up and down completely randomly.
Pair Corralation between Ford and Mercer
Taking into account the 90-day investment horizon Ford Motor is expected to generate 2.94 times more return on investment than Mercer. However, Ford is 2.94 times more volatile than Mercer International 55. It trades about 0.01 of its potential returns per unit of risk. Mercer International 55 is currently generating about 0.01 per unit of risk. If you would invest 1,143 in Ford Motor on August 28, 2024 and sell it today you would lose (3.00) from holding Ford Motor or give up 0.26% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 84.92% |
| Values | Daily Returns |
Ford Motor vs. Mercer International 55
Performance |
| Timeline |
| Ford Motor |
| Mercer International |
Ford and Mercer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Mercer
The main advantage of trading using opposite Ford and Mercer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Mercer 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 Mercer will offset losses from the drop in Mercer's long position.The idea behind Ford Motor and Mercer International 55 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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