Correlation Between Ford and Jyske Bank
Can any of the company-specific risk be diversified away by investing in both Ford and Jyske Bank 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 Jyske Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Jyske Bank AS, you can compare the effects of market volatilities on Ford and Jyske Bank 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 Jyske Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Jyske Bank.
Diversification Opportunities for Ford and Jyske Bank
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ford and Jyske is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Jyske Bank AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jyske Bank AS 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 Jyske Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jyske Bank AS has no effect on the direction of Ford i.e., Ford and Jyske Bank go up and down completely randomly.
Pair Corralation between Ford and Jyske Bank
Taking into account the 90-day investment horizon Ford is expected to generate 2.86 times less return on investment than Jyske Bank. In addition to that, Ford is 1.19 times more volatile than Jyske Bank AS. It trades about 0.02 of its total potential returns per unit of risk. Jyske Bank AS is currently generating about 0.06 per unit of volatility. If you would invest 35,037 in Jyske Bank AS on January 26, 2024 and sell it today you would earn a total of 22,163 from holding Jyske Bank AS or generate 63.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Ford Motor vs. Jyske Bank AS
Performance |
| Timeline |
| Ford Motor |
| Jyske Bank AS |
Ford and Jyske Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Jyske Bank
The main advantage of trading using opposite Ford and Jyske Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Jyske Bank 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 Jyske Bank will offset losses from the drop in Jyske Bank's long position.The idea behind Ford Motor and Jyske Bank AS 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.| Jyske Bank vs. Strategic Investments AS | Jyske Bank vs. Scandinavian Medical Solutions | Jyske Bank vs. Scape Technologies AS | Jyske Bank vs. Nordinvestments AS |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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