Correlation Between Ford and Vontobel Holding
Can any of the company-specific risk be diversified away by investing in both Ford and Vontobel Holding 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 Vontobel Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Vontobel Holding, you can compare the effects of market volatilities on Ford and Vontobel Holding 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 Vontobel Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Vontobel Holding.
Diversification Opportunities for Ford and Vontobel Holding
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ford and Vontobel is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Vontobel Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vontobel Holding 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 Vontobel Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vontobel Holding has no effect on the direction of Ford i.e., Ford and Vontobel Holding go up and down completely randomly.
Pair Corralation between Ford and Vontobel Holding
Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the Vontobel Holding. In addition to that, Ford is 2.47 times more volatile than Vontobel Holding. It trades about -0.07 of its total potential returns per unit of risk. Vontobel Holding is currently generating about 0.29 per unit of volatility. If you would invest 5,750 in Vontobel Holding on October 26, 2024 and sell it today you would earn a total of 840.00 from holding Vontobel Holding or generate 14.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 98.31% |
| Values | Daily Returns |
Ford Motor vs. Vontobel Holding
Performance |
| Timeline |
| Ford Motor |
| Vontobel Holding |
Ford and Vontobel Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Vontobel Holding
The main advantage of trading using opposite Ford and Vontobel Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Vontobel Holding 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 Vontobel Holding will offset losses from the drop in Vontobel Holding's long position.The idea behind Ford Motor and Vontobel Holding 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.| Vontobel Holding vs. Julius Baer Gruppe | Vontobel Holding vs. Helvetia Holding AG | Vontobel Holding vs. Sulzer AG | Vontobel Holding vs. Swiss Life Holding |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
Other Complementary Tools
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Stocks Directory Find actively traded stocks across global markets | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk |