Correlation Between Ford and Willy Food
Can any of the company-specific risk be diversified away by investing in both Ford and Willy Food 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 Willy Food into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Willy Food, you can compare the effects of market volatilities on Ford and Willy Food 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 Willy Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Willy Food.
Diversification Opportunities for Ford and Willy Food
-0.89 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Ford and Willy is -0.89. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Willy Food in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Willy Food 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 Willy Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Willy Food has no effect on the direction of Ford i.e., Ford and Willy Food go up and down completely randomly.
Pair Corralation between Ford and Willy Food
Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the Willy Food. In addition to that, Ford is 3.82 times more volatile than Willy Food. It trades about -0.13 of its total potential returns per unit of risk. Willy Food is currently generating about 0.22 per unit of volatility. If you would invest 290,300 in Willy Food on November 18, 2024 and sell it today you would earn a total of 6,700 from holding Willy Food or generate 2.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 80.95% |
| Values | Daily Returns |
Ford Motor vs. Willy Food
Performance |
| Timeline |
| Ford Motor |
| Willy Food |
Ford and Willy Food Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Willy Food
The main advantage of trading using opposite Ford and Willy Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Willy Food 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 Willy Food will offset losses from the drop in Willy Food's long position.The idea behind Ford Motor and Willy Food 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.| Willy Food vs. Rami Levi | Willy Food vs. Neto ME Holdings | Willy Food vs. Shufersal | Willy Food vs. Strauss Group |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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