Correlation Between Ford and Wynn Macau
Can any of the company-specific risk be diversified away by investing in both Ford and Wynn Macau 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 Wynn Macau into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Wynn Macau, you can compare the effects of market volatilities on Ford and Wynn Macau 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 Wynn Macau. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Wynn Macau.
Diversification Opportunities for Ford and Wynn Macau
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ford and Wynn is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Wynn Macau in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wynn Macau 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 Wynn Macau. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wynn Macau has no effect on the direction of Ford i.e., Ford and Wynn Macau go up and down completely randomly.
Pair Corralation between Ford and Wynn Macau
Taking into account the 90-day investment horizon Ford Motor is expected to generate 1.32 times more return on investment than Wynn Macau. However, Ford is 1.32 times more volatile than Wynn Macau. It trades about 0.03 of its potential returns per unit of risk. Wynn Macau is currently generating about -0.23 per unit of risk. If you would invest 1,109 in Ford Motor on August 25, 2024 and sell it today you would earn a total of 9.00 from holding Ford Motor or generate 0.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Ford Motor vs. Wynn Macau
Performance |
| Timeline |
| Ford Motor |
| Wynn Macau |
Ford and Wynn Macau Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Wynn Macau
The main advantage of trading using opposite Ford and Wynn Macau positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Wynn Macau 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 Wynn Macau will offset losses from the drop in Wynn Macau's long position.The idea behind Ford Motor and Wynn Macau 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.| Wynn Macau vs. Banyan Tree Holdings | Wynn Macau vs. Nagacorp | Wynn Macau vs. MGM China Holdings | Wynn Macau vs. Table Trac |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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