Correlation Between Ford and UNITED
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By analyzing existing cross correlation between Ford Motor and UNITED TECHNOLOGIES P, you can compare the effects of market volatilities on Ford and UNITED 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 UNITED. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and UNITED.
Diversification Opportunities for Ford and UNITED
Very good diversification
The 3 months correlation between Ford and UNITED is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and UNITED TECHNOLOGIES P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UNITED TECHNOLOGIES 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 UNITED. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UNITED TECHNOLOGIES has no effect on the direction of Ford i.e., Ford and UNITED go up and down completely randomly.
Pair Corralation between Ford and UNITED
Taking into account the 90-day investment horizon Ford Motor is expected to generate 1.96 times more return on investment than UNITED. However, Ford is 1.96 times more volatile than UNITED TECHNOLOGIES P. It trades about 0.25 of its potential returns per unit of risk. UNITED TECHNOLOGIES P is currently generating about -0.1 per unit of risk. If you would invest 1,008 in Ford Motor on September 2, 2024 and sell it today you would earn a total of 105.00 from holding Ford Motor or generate 10.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 66.67% |
| Values | Daily Returns |
Ford Motor vs. UNITED TECHNOLOGIES P
Performance |
| Timeline |
| Ford Motor |
| UNITED TECHNOLOGIES |
Ford and UNITED Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and UNITED
The main advantage of trading using opposite Ford and UNITED positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, UNITED 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 UNITED will offset losses from the drop in UNITED's long position.The idea behind Ford Motor and UNITED TECHNOLOGIES P 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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