Correlation Between Ford and Bonava AB
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By analyzing existing cross correlation between Ford Motor and Bonava AB, you can compare the effects of market volatilities on Ford and Bonava AB 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 Bonava AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Bonava AB.
Diversification Opportunities for Ford and Bonava AB
Very good diversification
The 3 months correlation between Ford and Bonava is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Bonava AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bonava AB 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 Bonava AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bonava AB has no effect on the direction of Ford i.e., Ford and Bonava AB go up and down completely randomly.
Pair Corralation between Ford and Bonava AB
Taking into account the 90-day investment horizon Ford Motor is expected to generate 0.8 times more return on investment than Bonava AB. However, Ford Motor is 1.25 times less risky than Bonava AB. It trades about 0.0 of its potential returns per unit of risk. Bonava AB is currently generating about 0.0 per unit of risk. If you would invest 1,052 in Ford Motor on September 7, 2024 and sell it today you would lose (8.00) from holding Ford Motor or give up 0.76% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 98.44% |
Values | Daily Returns |
Ford Motor vs. Bonava AB
Performance |
Timeline |
Ford Motor |
Bonava AB |
Ford and Bonava AB Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Ford and Bonava AB
The main advantage of trading using opposite Ford and Bonava AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Bonava AB 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 Bonava AB will offset losses from the drop in Bonava AB's long position.The idea behind Ford Motor and Bonava AB 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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