Correlation Between Ford and Jack In
Can any of the company-specific risk be diversified away by investing in both Ford and Jack In 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 Jack In into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Jack In The, you can compare the effects of market volatilities on Ford and Jack In 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 Jack In. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Jack In.
Diversification Opportunities for Ford and Jack In
Excellent diversification
The 3 months correlation between Ford and Jack is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Jack In The in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jack In 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 Jack In. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jack In has no effect on the direction of Ford i.e., Ford and Jack In go up and down completely randomly.
Pair Corralation between Ford and Jack In
Taking into account the 90-day investment horizon Ford Motor is expected to generate 1.27 times more return on investment than Jack In. However, Ford is 1.27 times more volatile than Jack In The. It trades about 0.02 of its potential returns per unit of risk. Jack In The is currently generating about -0.27 per unit of risk. If you would invest 1,290 in Ford Motor on January 25, 2024 and sell it today you would earn a total of 5.00 from holding Ford Motor or generate 0.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ford Motor vs. Jack In The
Performance |
| Timeline |
| Ford Motor |
| Jack In |
Ford and Jack In Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Jack In
The main advantage of trading using opposite Ford and Jack In positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Jack In 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 Jack In will offset losses from the drop in Jack In's long position.The idea behind Ford Motor and Jack In The 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.| Jack In vs. Dine Brands Global | Jack In vs. Bloomin Brands | Jack In vs. BJs Restaurants | Jack In vs. The Cheesecake Factory |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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