Correlation Between Ford and LEVEL
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By analyzing existing cross correlation between Ford Motor and LEVEL 3 FING, you can compare the effects of market volatilities on Ford and LEVEL 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 LEVEL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and LEVEL.
Diversification Opportunities for Ford and LEVEL
Good diversification
The 3 months correlation between Ford and LEVEL is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and LEVEL 3 FING in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LEVEL 3 FING 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 LEVEL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LEVEL 3 FING has no effect on the direction of Ford i.e., Ford and LEVEL go up and down completely randomly.
Pair Corralation between Ford and LEVEL
Taking into account the 90-day investment horizon Ford Motor is expected to generate 0.2 times more return on investment than LEVEL. However, Ford Motor is 4.91 times less risky than LEVEL. It trades about -0.02 of its potential returns per unit of risk. LEVEL 3 FING is currently generating about -0.2 per unit of risk. If you would invest 961.00 in Ford Motor on December 5, 2024 and sell it today you would lose (22.00) from holding Ford Motor or give up 2.29% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 66.67% |
Values | Daily Returns |
Ford Motor vs. LEVEL 3 FING
Performance |
Timeline |
Ford Motor |
LEVEL 3 FING |
Ford and LEVEL Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Ford and LEVEL
The main advantage of trading using opposite Ford and LEVEL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, LEVEL 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 LEVEL will offset losses from the drop in LEVEL's long position.The idea behind Ford Motor and LEVEL 3 FING 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.LEVEL vs. Mitsubishi UFJ Lease | LEVEL vs. HF Sinclair Corp | LEVEL vs. FTAI Aviation Ltd | LEVEL vs. Federal Home Loan |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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