Correlation Between Ford and Exagen
Can any of the company-specific risk be diversified away by investing in both Ford and Exagen 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 Exagen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Exagen Inc, you can compare the effects of market volatilities on Ford and Exagen 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 Exagen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Exagen.
Diversification Opportunities for Ford and Exagen
Weak diversification
The 3 months correlation between Ford and Exagen is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Exagen Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Exagen Inc 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 Exagen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Exagen Inc has no effect on the direction of Ford i.e., Ford and Exagen go up and down completely randomly.
Pair Corralation between Ford and Exagen
Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the Exagen. But the stock apears to be less risky and, when comparing its historical volatility, Ford Motor is 2.18 times less risky than Exagen. The stock trades about 0.0 of its potential returns per unit of risk. The Exagen Inc is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 319.00 in Exagen Inc on August 31, 2024 and sell it today you would earn a total of 78.00 from holding Exagen Inc or generate 24.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ford Motor vs. Exagen Inc
Performance |
| Timeline |
| Ford Motor |
| Exagen Inc |
Ford and Exagen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Exagen
The main advantage of trading using opposite Ford and Exagen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Exagen 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 Exagen will offset losses from the drop in Exagen's long position.The idea behind Ford Motor and Exagen Inc 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.| Exagen vs. Fonar | Exagen vs. Burning Rock Biotech | Exagen vs. Sera Prognostics | Exagen vs. Castle Biosciences |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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