Correlation Between Ford and Naked Wines
Can any of the company-specific risk be diversified away by investing in both Ford and Naked Wines 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 Naked Wines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Naked Wines Plc, you can compare the effects of market volatilities on Ford and Naked Wines 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 Naked Wines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Naked Wines.
Diversification Opportunities for Ford and Naked Wines
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Ford and Naked is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Naked Wines Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Naked Wines Plc 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 Naked Wines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Naked Wines Plc has no effect on the direction of Ford i.e., Ford and Naked Wines go up and down completely randomly.
Pair Corralation between Ford and Naked Wines
If you would invest 1,294 in Ford Motor on January 24, 2024 and sell it today you would earn a total of 0.00 from holding Ford Motor or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 0.0% |
| Values | Daily Returns |
Ford Motor vs. Naked Wines Plc
Performance |
| Timeline |
| Ford Motor |
| Naked Wines Plc |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Ford and Naked Wines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Naked Wines
The main advantage of trading using opposite Ford and Naked Wines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Naked Wines 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 Naked Wines will offset losses from the drop in Naked Wines' long position.The idea behind Ford Motor and Naked Wines Plc 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.| Naked Wines vs. Summit Materials | Naked Wines vs. Lifevantage | Naked Wines vs. Bridgford Foods | Naked Wines vs. Perseus Mining Limited |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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