Correlation Between Ford and Zuger Kantonalbank
Can any of the company-specific risk be diversified away by investing in both Ford and Zuger Kantonalbank 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 Zuger Kantonalbank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Zuger Kantonalbank, you can compare the effects of market volatilities on Ford and Zuger Kantonalbank 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 Zuger Kantonalbank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Zuger Kantonalbank.
Diversification Opportunities for Ford and Zuger Kantonalbank
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ford and Zuger is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Zuger Kantonalbank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zuger Kantonalbank 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 Zuger Kantonalbank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zuger Kantonalbank has no effect on the direction of Ford i.e., Ford and Zuger Kantonalbank go up and down completely randomly.
Pair Corralation between Ford and Zuger Kantonalbank
Taking into account the 90-day investment horizon Ford is expected to generate 1.68 times less return on investment than Zuger Kantonalbank. In addition to that, Ford is 3.44 times more volatile than Zuger Kantonalbank. It trades about 0.01 of its total potential returns per unit of risk. Zuger Kantonalbank is currently generating about 0.06 per unit of volatility. If you would invest 687,147 in Zuger Kantonalbank on September 2, 2024 and sell it today you would earn a total of 132,853 from holding Zuger Kantonalbank or generate 19.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ford Motor vs. Zuger Kantonalbank
Performance |
| Timeline |
| Ford Motor |
| Zuger Kantonalbank |
Ford and Zuger Kantonalbank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Zuger Kantonalbank
The main advantage of trading using opposite Ford and Zuger Kantonalbank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Zuger Kantonalbank 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 Zuger Kantonalbank will offset losses from the drop in Zuger Kantonalbank's long position.The idea behind Ford Motor and Zuger Kantonalbank 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.| Zuger Kantonalbank vs. Banque Cantonale | Zuger Kantonalbank vs. St Galler Kantonalbank | Zuger Kantonalbank vs. PSP Swiss Property | Zuger Kantonalbank vs. Berner Kantonalbank AG |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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