Correlation Between Ford and Beyond Air
Can any of the company-specific risk be diversified away by investing in both Ford and Beyond Air 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 Beyond Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Beyond Air, you can compare the effects of market volatilities on Ford and Beyond Air 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 Beyond Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Beyond Air.
Diversification Opportunities for Ford and Beyond Air
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ford and Beyond is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Beyond Air in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beyond Air 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 Beyond Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beyond Air has no effect on the direction of Ford i.e., Ford and Beyond Air go up and down completely randomly.
Pair Corralation between Ford and Beyond Air
Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the Beyond Air. But the stock apears to be less risky and, when comparing its historical volatility, Ford Motor is 2.18 times less risky than Beyond Air. The stock trades about -0.09 of its potential returns per unit of risk. The Beyond Air is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 38.00 in Beyond Air on November 9, 2024 and sell it today you would earn a total of 2.00 from holding Beyond Air or generate 5.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ford Motor vs. Beyond Air
Performance |
| Timeline |
| Ford Motor |
| Beyond Air |
Ford and Beyond Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Beyond Air
The main advantage of trading using opposite Ford and Beyond Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Beyond Air 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 Beyond Air will offset losses from the drop in Beyond Air's long position.The idea behind Ford Motor and Beyond Air 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.| Beyond Air vs. Lucid Diagnostics | Beyond Air vs. Inari Medical | Beyond Air vs. PAVmed Series Z | Beyond Air vs. Clearpoint Neuro |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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