Correlation Between Ford and Washington Business
Can any of the company-specific risk be diversified away by investing in both Ford and Washington Business 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 Washington Business into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Washington Business Bank, you can compare the effects of market volatilities on Ford and Washington Business 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 Washington Business. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Washington Business.
Diversification Opportunities for Ford and Washington Business
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ford and Washington is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Washington Business Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Washington Business Bank 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 Washington Business. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Washington Business Bank has no effect on the direction of Ford i.e., Ford and Washington Business go up and down completely randomly.
Pair Corralation between Ford and Washington Business
If you would invest 3,600 in Washington Business Bank on October 26, 2024 and sell it today you would earn a total of 0.00 from holding Washington Business Bank or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 15.0% |
| Values | Daily Returns |
Ford Motor vs. Washington Business Bank
Performance |
| Timeline |
| Ford Motor |
| Washington Business Bank |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Solid
Ford and Washington Business Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Washington Business
The main advantage of trading using opposite Ford and Washington Business positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Washington Business 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 Washington Business will offset losses from the drop in Washington Business' long position.The idea behind Ford Motor and Washington Business Bank 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.| Washington Business vs. National Capital Bank | Washington Business vs. Community Heritage Financial | Washington Business vs. Citizens Financial Corp | Washington Business vs. Bank of Idaho |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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