Correlation Between Ford and Viking Holdings
Can any of the company-specific risk be diversified away by investing in both Ford and Viking Holdings 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 Viking Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Viking Holdings, you can compare the effects of market volatilities on Ford and Viking Holdings 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 Viking Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Viking Holdings.
Diversification Opportunities for Ford and Viking Holdings
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Ford and Viking is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Viking Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Viking Holdings 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 Viking Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Viking Holdings has no effect on the direction of Ford i.e., Ford and Viking Holdings go up and down completely randomly.
Pair Corralation between Ford and Viking Holdings
Taking into account the 90-day investment horizon Ford is expected to generate 18.09 times less return on investment than Viking Holdings. In addition to that, Ford is 1.24 times more volatile than Viking Holdings. It trades about 0.01 of its total potential returns per unit of risk. Viking Holdings is currently generating about 0.32 per unit of volatility. If you would invest 3,355 in Viking Holdings on August 30, 2024 and sell it today you would earn a total of 1,290 from holding Viking Holdings or generate 38.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ford Motor vs. Viking Holdings
Performance |
| Timeline |
| Ford Motor |
| Viking Holdings |
Ford and Viking Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Viking Holdings
The main advantage of trading using opposite Ford and Viking Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Viking Holdings 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 Viking Holdings will offset losses from the drop in Viking Holdings' long position.The idea behind Ford Motor and Viking Holdings 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.| Viking Holdings vs. Integrated Drilling Equipment | Viking Holdings vs. National Beverage Corp | Viking Holdings vs. Seadrill Limited | Viking Holdings vs. Celsius Holdings |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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