Correlation Between Ford and Roblon AS
Can any of the company-specific risk be diversified away by investing in both Ford and Roblon AS 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 Roblon AS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Roblon AS, you can compare the effects of market volatilities on Ford and Roblon AS 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 Roblon AS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Roblon AS.
Diversification Opportunities for Ford and Roblon AS
Very good diversification
The 3 months correlation between Ford and Roblon is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Roblon AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Roblon 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 Roblon AS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Roblon AS has no effect on the direction of Ford i.e., Ford and Roblon AS go up and down completely randomly.
Pair Corralation between Ford and Roblon AS
Taking into account the 90-day investment horizon Ford Motor is expected to generate 1.39 times more return on investment than Roblon AS. However, Ford is 1.39 times more volatile than Roblon AS. It trades about 0.01 of its potential returns per unit of risk. Roblon AS is currently generating about -0.05 per unit of risk. If you would invest 1,294 in Ford Motor on January 24, 2024 and sell it today you would lose (6.00) from holding Ford Motor or give up 0.46% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Ford Motor vs. Roblon AS
Performance |
| Timeline |
| Ford Motor |
| Roblon AS |
Ford and Roblon AS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Roblon AS
The main advantage of trading using opposite Ford and Roblon AS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Roblon AS 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 Roblon AS will offset losses from the drop in Roblon AS's long position.The idea behind Ford Motor and Roblon 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.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 Stocks Directory module to find actively traded stocks across global markets.
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