Correlation Between Ford and YIT Oyj
Can any of the company-specific risk be diversified away by investing in both Ford and YIT Oyj 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 YIT Oyj into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and YIT Oyj, you can compare the effects of market volatilities on Ford and YIT Oyj 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 YIT Oyj. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and YIT Oyj.
Diversification Opportunities for Ford and YIT Oyj
Very good diversification
The 3 months correlation between Ford and YIT is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and YIT Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on YIT Oyj 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 YIT Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of YIT Oyj has no effect on the direction of Ford i.e., Ford and YIT Oyj go up and down completely randomly.
Pair Corralation between Ford and YIT Oyj
Taking into account the 90-day investment horizon Ford is expected to generate 7.0 times less return on investment than YIT Oyj. But when comparing it to its historical volatility, Ford Motor is 1.13 times less risky than YIT Oyj. It trades about 0.01 of its potential returns per unit of risk. YIT Oyj is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 216.00 in YIT Oyj on August 25, 2024 and sell it today you would earn a total of 35.00 from holding YIT Oyj or generate 16.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 97.69% |
| Values | Daily Returns |
Ford Motor vs. YIT Oyj
Performance |
| Timeline |
| Ford Motor |
| YIT Oyj |
Ford and YIT Oyj Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and YIT Oyj
The main advantage of trading using opposite Ford and YIT Oyj positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, YIT Oyj 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 YIT Oyj will offset losses from the drop in YIT Oyj's long position.The idea behind Ford Motor and YIT Oyj 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.| YIT Oyj vs. Aktia Bank Abp | YIT Oyj vs. Alandsbanken Abp B | YIT Oyj vs. Alandsbanken Abp A | YIT Oyj vs. Sampo Oyj A |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
Other Complementary Tools
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance |