Correlation Between Ford and WILLIAMS
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By analyzing existing cross correlation between Ford Motor and WILLIAMS PARTNERS L, you can compare the effects of market volatilities on Ford and WILLIAMS 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 WILLIAMS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and WILLIAMS.
Diversification Opportunities for Ford and WILLIAMS
Good diversification
The 3 months correlation between Ford and WILLIAMS is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and WILLIAMS PARTNERS L in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WILLIAMS PARTNERS 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 WILLIAMS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WILLIAMS PARTNERS has no effect on the direction of Ford i.e., Ford and WILLIAMS go up and down completely randomly.
Pair Corralation between Ford and WILLIAMS
Taking into account the 90-day investment horizon Ford is expected to generate 233.59 times less return on investment than WILLIAMS. But when comparing it to its historical volatility, Ford Motor is 35.96 times less risky than WILLIAMS. It trades about 0.01 of its potential returns per unit of risk. WILLIAMS PARTNERS L is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 9,278 in WILLIAMS PARTNERS L on August 27, 2024 and sell it today you would lose (367.00) from holding WILLIAMS PARTNERS L or give up 3.96% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 89.31% |
| Values | Daily Returns |
Ford Motor vs. WILLIAMS PARTNERS L
Performance |
| Timeline |
| Ford Motor |
| WILLIAMS PARTNERS |
Ford and WILLIAMS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and WILLIAMS
The main advantage of trading using opposite Ford and WILLIAMS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, WILLIAMS 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 WILLIAMS will offset losses from the drop in WILLIAMS's long position.The idea behind Ford Motor and WILLIAMS PARTNERS L 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.| WILLIAMS vs. Lululemon Athletica | WILLIAMS vs. Solstad Offshore ASA | WILLIAMS vs. KNOT Offshore Partners | WILLIAMS vs. Reservoir Media |
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