Correlation Between Ford and Digimarc
Can any of the company-specific risk be diversified away by investing in both Ford and Digimarc 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 Digimarc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Digimarc, you can compare the effects of market volatilities on Ford and Digimarc 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 Digimarc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Digimarc.
Diversification Opportunities for Ford and Digimarc
Excellent diversification
The 3 months correlation between Ford and Digimarc is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Digimarc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Digimarc 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 Digimarc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Digimarc has no effect on the direction of Ford i.e., Ford and Digimarc go up and down completely randomly.
Pair Corralation between Ford and Digimarc
Taking into account the 90-day investment horizon Ford Motor is expected to generate 1.08 times more return on investment than Digimarc. However, Ford is 1.08 times more volatile than Digimarc. It trades about 0.01 of its potential returns per unit of risk. Digimarc is currently generating about -0.42 per unit of risk. If you would invest 1,306 in Ford Motor on January 27, 2024 and sell it today you would lose (2.00) from holding Ford Motor or give up 0.15% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ford Motor vs. Digimarc
Performance |
| Timeline |
| Ford Motor |
| Digimarc |
Ford and Digimarc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Digimarc
The main advantage of trading using opposite Ford and Digimarc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Digimarc 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 Digimarc will offset losses from the drop in Digimarc's long position.| Ford vs. Pfizer Inc | Ford vs. Hertz Global Holdings | Ford vs. EASTMAN CHEM 45 | Ford vs. Fuller Thaler Behavioral |
| Digimarc vs. EPAM Systems | Digimarc vs. Infosys Ltd ADR | Digimarc vs. Cognizant Technology Solutions | Digimarc vs. FiscalNote Holdings |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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