Correlation Between Ford and Austevoll Seafood
Can any of the company-specific risk be diversified away by investing in both Ford and Austevoll Seafood 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 Austevoll Seafood into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Austevoll Seafood ASA, you can compare the effects of market volatilities on Ford and Austevoll Seafood 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 Austevoll Seafood. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Austevoll Seafood.
Diversification Opportunities for Ford and Austevoll Seafood
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Ford and Austevoll is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Austevoll Seafood ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Austevoll Seafood ASA 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 Austevoll Seafood. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Austevoll Seafood ASA has no effect on the direction of Ford i.e., Ford and Austevoll Seafood go up and down completely randomly.
Pair Corralation between Ford and Austevoll Seafood
Taking into account the 90-day investment horizon Ford is expected to generate 2.06 times less return on investment than Austevoll Seafood. In addition to that, Ford is 1.43 times more volatile than Austevoll Seafood ASA. It trades about 0.04 of its total potential returns per unit of risk. Austevoll Seafood ASA is currently generating about 0.12 per unit of volatility. If you would invest 819.00 in Austevoll Seafood ASA on August 28, 2024 and sell it today you would earn a total of 36.00 from holding Austevoll Seafood ASA or generate 4.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Ford Motor vs. Austevoll Seafood ASA
Performance |
| Timeline |
| Ford Motor |
| Austevoll Seafood ASA |
Ford and Austevoll Seafood Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Austevoll Seafood
The main advantage of trading using opposite Ford and Austevoll Seafood positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Austevoll Seafood 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 Austevoll Seafood will offset losses from the drop in Austevoll Seafood's long position.The idea behind Ford Motor and Austevoll Seafood ASA 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.| Austevoll Seafood vs. Superior Plus Corp | Austevoll Seafood vs. NMI Holdings | Austevoll Seafood vs. Origin Agritech | Austevoll Seafood vs. SIVERS SEMICONDUCTORS AB |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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