Correlation Between Ford and Emerald Expositions
Can any of the company-specific risk be diversified away by investing in both Ford and Emerald Expositions 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 Emerald Expositions into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Emerald Expositions Events, you can compare the effects of market volatilities on Ford and Emerald Expositions 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 Emerald Expositions. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Emerald Expositions.
Diversification Opportunities for Ford and Emerald Expositions
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ford and Emerald is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Emerald Expositions Events in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emerald Expositions 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 Emerald Expositions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emerald Expositions has no effect on the direction of Ford i.e., Ford and Emerald Expositions go up and down completely randomly.
Pair Corralation between Ford and Emerald Expositions
Taking into account the 90-day investment horizon Ford Motor is expected to generate 1.26 times more return on investment than Emerald Expositions. However, Ford is 1.26 times more volatile than Emerald Expositions Events. It trades about -0.09 of its potential returns per unit of risk. Emerald Expositions Events is currently generating about -0.19 per unit of risk. If you would invest 1,063 in Ford Motor on December 1, 2024 and sell it today you would lose (108.00) from holding Ford Motor or give up 10.16% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Ford Motor vs. Emerald Expositions Events
Performance |
Timeline |
Ford Motor |
Emerald Expositions |
Ford and Emerald Expositions Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Ford and Emerald Expositions
The main advantage of trading using opposite Ford and Emerald Expositions positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Emerald Expositions 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 Emerald Expositions will offset losses from the drop in Emerald Expositions' long position.The idea behind Ford Motor and Emerald Expositions Events 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.Emerald Expositions vs. Mirriad Advertising plc | Emerald Expositions vs. INEO Tech Corp | Emerald Expositions vs. Marchex | Emerald Expositions vs. Clear Channel Outdoor |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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