Correlation Between Ford and PHILIP
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By analyzing existing cross correlation between Ford Motor and PHILIP MORRIS INTL, you can compare the effects of market volatilities on Ford and PHILIP 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 PHILIP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and PHILIP.
Diversification Opportunities for Ford and PHILIP
Very good diversification
The 3 months correlation between Ford and PHILIP is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and PHILIP MORRIS INTL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PHILIP MORRIS INTL 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 PHILIP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PHILIP MORRIS INTL has no effect on the direction of Ford i.e., Ford and PHILIP go up and down completely randomly.
Pair Corralation between Ford and PHILIP
Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the PHILIP. In addition to that, Ford is 7.07 times more volatile than PHILIP MORRIS INTL. It trades about -0.01 of its total potential returns per unit of risk. PHILIP MORRIS INTL is currently generating about 0.06 per unit of volatility. If you would invest 9,321 in PHILIP MORRIS INTL on August 31, 2024 and sell it today you would earn a total of 255.00 from holding PHILIP MORRIS INTL or generate 2.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.43% |
| Values | Daily Returns |
Ford Motor vs. PHILIP MORRIS INTL
Performance |
| Timeline |
| Ford Motor |
| PHILIP MORRIS INTL |
Ford and PHILIP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and PHILIP
The main advantage of trading using opposite Ford and PHILIP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, PHILIP 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 PHILIP will offset losses from the drop in PHILIP's long position.The idea behind Ford Motor and PHILIP MORRIS INTL 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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