Correlation Between Ford and UNION
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By analyzing existing cross correlation between Ford Motor and UNION ELEC 4, you can compare the effects of market volatilities on Ford and UNION 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 UNION. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and UNION.
Diversification Opportunities for Ford and UNION
Good diversification
The 3 months correlation between Ford and UNION is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and UNION ELEC 4 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UNION ELEC 4 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 UNION. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UNION ELEC 4 has no effect on the direction of Ford i.e., Ford and UNION go up and down completely randomly.
Pair Corralation between Ford and UNION
Taking into account the 90-day investment horizon Ford Motor is expected to generate 1.71 times more return on investment than UNION. However, Ford is 1.71 times more volatile than UNION ELEC 4. It trades about 0.14 of its potential returns per unit of risk. UNION ELEC 4 is currently generating about 0.08 per unit of risk. If you would invest 1,022 in Ford Motor on September 5, 2024 and sell it today you would earn a total of 60.00 from holding Ford Motor or generate 5.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 47.62% |
| Values | Daily Returns |
Ford Motor vs. UNION ELEC 4
Performance |
| Timeline |
| Ford Motor |
| UNION ELEC 4 |
Ford and UNION Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and UNION
The main advantage of trading using opposite Ford and UNION positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, UNION 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 UNION will offset losses from the drop in UNION's long position.The idea behind Ford Motor and UNION ELEC 4 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.| UNION vs. CenterPoint Energy | UNION vs. Radcom | UNION vs. Empresa Distribuidora y | UNION vs. Western Midstream Partners |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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