This module allows you to analyze existing cross correlation between Ford Motor Company and Visa. You can compare the effects of market volatilities on Ford Motor and Visa 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 Visa. See also your portfolio center. Please also check ongoing floating volatility patterns of Ford Motor and Visa.
Taking into account the 30 trading days horizon, Ford Motor Company is expected to generate 1.09 times more return on investment than Visa. However, Ford Motor is 1.09 times more volatile than Visa. It trades about 0.04 of its potential returns per unit of risk. Visa is currently generating about -0.04 per unit of risk. If you would invest 1,089 in Ford Motor Company on March 27, 2018 and sell it today you would earn a total of 22.00 from holding Ford Motor Company or generate 2.02% return on investment over 30 days.
Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor Company and Visa Inc in the same portfolio assuming nothing else is changed. The correlation between historical prices or returns on Visa 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 Visa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Visa has no effect on the direction of Ford Motor i.e. Ford Motor and Visa go up and down completely randomly.
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