diversifiable risk of combining Ford and Uber Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Uber Technologies, you can compare the effects of market volatilities on Ford and Uber Technologies 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 Uber Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Uber Technologies.
Diversification Opportunities for Ford and Uber Technologies
Pair Corralation between Ford and Uber Technologies
Taking into account the 90-day investment horizon Ford is expected to generate 2.16 times less return on investment than Uber Technologies. But when comparing it to its historical volatility, Ford Motor is 1.61 times less risky than Uber Technologies. It trades about 0.21 of its potential returns per unit of risk. Uber Technologies is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest 6,376 in Uber Technologies on November 25, 2023 and sell it today you would earn a total of 1,427 from holding Uber Technologies or generate 22.38% return on investment over 90 days.
Ford Motor vs. Uber Technologies
Ford and Uber Technologies Volatility Contrast
Pair Trading with Ford and Uber TechnologiesThe main advantage of trading using opposite Ford and Uber Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Uber Technologies 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 Uber Technologies will offset losses from the drop in Uber Technologies' long position. The idea behind Ford Motor and Uber Technologies 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 AI Investment Finder module to use AI to screen and filter profitable investment opportunities.
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