This module allows you to analyze existing cross correlation between Ford Motor Company and Alphabet. You can compare the effects of market volatilities on Ford Motor and Alphabet 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 Motor with a short position of Alphabet. See also your portfolio center. Please also check ongoing floating volatility patterns of Ford Motor and Alphabet.
Taking into account the 30 trading days horizon, Ford Motor Company is expected to under-perform the Alphabet. In addition to that, Ford Motor is 1.3 times more volatile than Alphabet. It trades about -0.26 of its total potential returns per unit of risk. Alphabet is currently generating about -0.01 per unit of volatility. If you would invest 120,550 in Alphabet on July 21, 2018 and sell it today you would lose (454.00) from holding Alphabet or give up 0.38% of portfolio value over 30 days.
Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor Company and Alphabet Inc in the same portfolio assuming nothing else is changed. The correlation between historical prices or returns on Alphabet and Ford Motor 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 Company are associated (or correlated) with Alphabet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alphabet has no effect on the direction of Ford Motor i.e. Ford Motor and Alphabet go up and down completely randomly.
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