Correlation Between Ford and Avgol Industries
Can any of the company-specific risk be diversified away by investing in both Ford and Avgol Industries 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 Avgol Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Avgol Industries 1953, you can compare the effects of market volatilities on Ford and Avgol Industries 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 Avgol Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Avgol Industries.
Diversification Opportunities for Ford and Avgol Industries
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Ford and Avgol is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Avgol Industries 1953 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avgol Industries 1953 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 Avgol Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avgol Industries 1953 has no effect on the direction of Ford i.e., Ford and Avgol Industries go up and down completely randomly.
Pair Corralation between Ford and Avgol Industries
Taking into account the 90-day investment horizon Ford Motor is expected to generate 0.84 times more return on investment than Avgol Industries. However, Ford Motor is 1.19 times less risky than Avgol Industries. It trades about 0.02 of its potential returns per unit of risk. Avgol Industries 1953 is currently generating about -0.03 per unit of risk. If you would invest 1,156 in Ford Motor on January 27, 2024 and sell it today you would earn a total of 148.00 from holding Ford Motor or generate 12.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 79.15% |
| Values | Daily Returns |
Ford Motor vs. Avgol Industries 1953
Performance |
| Timeline |
| Ford Motor |
| Avgol Industries 1953 |
Ford and Avgol Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Avgol Industries
The main advantage of trading using opposite Ford and Avgol Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Avgol Industries 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 Avgol Industries will offset losses from the drop in Avgol Industries' long position.| Ford vs. Hycroft Mining Holding | Ford vs. Imperial Petroleum | Ford vs. Exela Technologies | Ford vs. Camber Energy |
| Avgol Industries vs. Clal Insurance Enterprises | Avgol Industries vs. Israel Discount Bank | Avgol Industries vs. Bezeq Israeli Telecommunication | Avgol Industries vs. Alony Hetz Properties |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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