Correlation Between Ford and Sparinvest Lange
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By analyzing existing cross correlation between Ford Motor and Sparinvest Lange, you can compare the effects of market volatilities on Ford and Sparinvest Lange 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 Sparinvest Lange. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Sparinvest Lange.
Diversification Opportunities for Ford and Sparinvest Lange
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Ford and Sparinvest is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Sparinvest Lange in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sparinvest Lange 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 Sparinvest Lange. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sparinvest Lange has no effect on the direction of Ford i.e., Ford and Sparinvest Lange go up and down completely randomly.
Pair Corralation between Ford and Sparinvest Lange
Taking into account the 90-day investment horizon Ford Motor is expected to generate 6.22 times more return on investment than Sparinvest Lange. However, Ford is 6.22 times more volatile than Sparinvest Lange. It trades about 0.02 of its potential returns per unit of risk. Sparinvest Lange is currently generating about 0.06 per unit of risk. If you would invest 1,139 in Ford Motor on January 19, 2024 and sell it today you would earn a total of 65.00 from holding Ford Motor or generate 5.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
Ford Motor vs. Sparinvest Lange
Performance |
| Timeline |
| Ford Motor |
| Sparinvest Lange |
Ford and Sparinvest Lange Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Sparinvest Lange
The main advantage of trading using opposite Ford and Sparinvest Lange positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Sparinvest Lange 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 Sparinvest Lange will offset losses from the drop in Sparinvest Lange's long position.The idea behind Ford Motor and Sparinvest Lange 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.| Sparinvest Lange vs. Jyske Invest Nye | Sparinvest Lange vs. Jyske Invest Nye | Sparinvest Lange vs. Jyske Invest Hjt | Sparinvest Lange vs. Jyske Invest Lange |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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