Correlation Between Ford and Pnc International
Can any of the company-specific risk be diversified away by investing in both Ford and Pnc International 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 Pnc International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Pnc International Equity, you can compare the effects of market volatilities on Ford and Pnc International 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 Pnc International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Pnc International.
Diversification Opportunities for Ford and Pnc International
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Ford and Pnc is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Pnc International Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pnc International Equity 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 Pnc International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pnc International Equity has no effect on the direction of Ford i.e., Ford and Pnc International go up and down completely randomly.
Pair Corralation between Ford and Pnc International
Taking into account the 90-day investment horizon Ford Motor is expected to generate 0.5 times more return on investment than Pnc International. However, Ford Motor is 1.99 times less risky than Pnc International. It trades about -0.5 of its potential returns per unit of risk. Pnc International Equity is currently generating about -0.28 per unit of risk. If you would invest 1,140 in Ford Motor on September 25, 2024 and sell it today you would lose (152.00) from holding Ford Motor or give up 13.33% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 95.24% |
Values | Daily Returns |
Ford Motor vs. Pnc International Equity
Performance |
Timeline |
Ford Motor |
Pnc International Equity |
Ford and Pnc International Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Ford and Pnc International
The main advantage of trading using opposite Ford and Pnc International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Pnc International 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 Pnc International will offset losses from the drop in Pnc International's long position.The idea behind Ford Motor and Pnc International Equity 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.Pnc International vs. Fidelity Series 1000 | Pnc International vs. Lord Abbett Affiliated | Pnc International vs. Jhancock Disciplined Value | Pnc International vs. Dunham Large Cap |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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