Correlation Between Ford and Elbit Med
Can any of the company-specific risk be diversified away by investing in both Ford and Elbit Med 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 Elbit Med into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Elbit Med Tech, you can compare the effects of market volatilities on Ford and Elbit Med 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 Elbit Med. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Elbit Med.
Diversification Opportunities for Ford and Elbit Med
Modest diversification
The 3 months correlation between Ford and Elbit is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Elbit Med Tech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elbit Med Tech 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 Elbit Med. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elbit Med Tech has no effect on the direction of Ford i.e., Ford and Elbit Med go up and down completely randomly.
Pair Corralation between Ford and Elbit Med
Taking into account the 90-day investment horizon Ford Motor is expected to generate 0.26 times more return on investment than Elbit Med. However, Ford Motor is 3.79 times less risky than Elbit Med. It trades about 0.13 of its potential returns per unit of risk. Elbit Med Tech is currently generating about -0.09 per unit of risk. If you would invest 1,104 in Ford Motor on January 25, 2024 and sell it today you would earn a total of 190.00 from holding Ford Motor or generate 17.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 77.78% |
| Values | Daily Returns |
Ford Motor vs. Elbit Med Tech
Performance |
| Timeline |
| Ford Motor |
| Elbit Med Tech |
Ford and Elbit Med Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Elbit Med
The main advantage of trading using opposite Ford and Elbit Med positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Elbit Med 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 Elbit Med will offset losses from the drop in Elbit Med's long position.The idea behind Ford Motor and Elbit Med Tech 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.| Elbit Med vs. Creative Media Community | Elbit Med vs. G Willi Food International | Elbit Med vs. More Provident Funds | Elbit Med vs. Scope Metals Group |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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