Correlation Between Ford and Bollore SA
Can any of the company-specific risk be diversified away by investing in both Ford and Bollore SA 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 Bollore SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Bollore SA, you can compare the effects of market volatilities on Ford and Bollore SA 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 Bollore SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Bollore SA.
Diversification Opportunities for Ford and Bollore SA
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Ford and Bollore is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Bollore SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bollore SA 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 Bollore SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bollore SA has no effect on the direction of Ford i.e., Ford and Bollore SA go up and down completely randomly.
Pair Corralation between Ford and Bollore SA
Taking into account the 90-day investment horizon Ford Motor is expected to generate 1.77 times more return on investment than Bollore SA. However, Ford is 1.77 times more volatile than Bollore SA. It trades about 0.03 of its potential returns per unit of risk. Bollore SA is currently generating about 0.04 per unit of risk. If you would invest 1,044 in Ford Motor on September 6, 2024 and sell it today you would earn a total of 30.00 from holding Ford Motor or generate 2.87% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 98.46% |
Values | Daily Returns |
Ford Motor vs. Bollore SA
Performance |
Timeline |
Ford Motor |
Bollore SA |
Ford and Bollore SA Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Ford and Bollore SA
The main advantage of trading using opposite Ford and Bollore SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Bollore SA 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 Bollore SA will offset losses from the drop in Bollore SA's long position.The idea behind Ford Motor and Bollore SA 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.Bollore SA vs. Vivendi SA | Bollore SA vs. Wendel | Bollore SA vs. Compagnie de lOdet | Bollore SA vs. Eurazeo |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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