Correlation Between Ford and Veea
Can any of the company-specific risk be diversified away by investing in both Ford and Veea at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Ford and Veea into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Veea Inc, you can compare the effects of market volatilities on Ford and Veea 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 Veea. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Veea.
Diversification Opportunities for Ford and Veea
Average diversification
The 3 months correlation between Ford and Veea is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Veea Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Veea Inc 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 Veea. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Veea Inc has no effect on the direction of Ford i.e., Ford and Veea go up and down completely randomly.
Pair Corralation between Ford and Veea
Taking into account the 90-day investment horizon Ford is expected to generate 376.83 times less return on investment than Veea. But when comparing it to its historical volatility, Ford Motor is 11.82 times less risky than Veea. It trades about 0.0 of its potential returns per unit of risk. Veea Inc is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 5.00 in Veea Inc on September 12, 2024 and sell it today you would earn a total of 9.50 from holding Veea Inc or generate 190.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 67.98% |
| Values | Daily Returns |
Ford Motor vs. Veea Inc
Performance |
| Timeline |
| Ford Motor |
| Veea Inc |
Ford and Veea Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Veea
The main advantage of trading using opposite Ford and Veea positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Veea 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 Veea will offset losses from the drop in Veea's long position.The idea behind Ford Motor and Veea Inc 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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