Correlation Between Ford and Hamilton Beach
Can any of the company-specific risk be diversified away by investing in both Ford and Hamilton Beach 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 Hamilton Beach into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Hamilton Beach Brands, you can compare the effects of market volatilities on Ford and Hamilton Beach 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 Hamilton Beach. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Hamilton Beach.
Diversification Opportunities for Ford and Hamilton Beach
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ford and Hamilton is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Hamilton Beach Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hamilton Beach Brands 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 Hamilton Beach. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hamilton Beach Brands has no effect on the direction of Ford i.e., Ford and Hamilton Beach go up and down completely randomly.
Pair Corralation between Ford and Hamilton Beach
Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the Hamilton Beach. But the stock apears to be less risky and, when comparing its historical volatility, Ford Motor is 2.21 times less risky than Hamilton Beach. The stock trades about -0.14 of its potential returns per unit of risk. The Hamilton Beach Brands is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 2,125 in Hamilton Beach Brands on January 20, 2024 and sell it today you would earn a total of 4.00 from holding Hamilton Beach Brands or generate 0.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Ford Motor vs. Hamilton Beach Brands
Performance |
| Timeline |
| Ford Motor |
| Hamilton Beach Brands |
Ford and Hamilton Beach Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Hamilton Beach
The main advantage of trading using opposite Ford and Hamilton Beach positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Hamilton Beach 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 Hamilton Beach will offset losses from the drop in Hamilton Beach's long position.The idea behind Ford Motor and Hamilton Beach Brands 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.| Hamilton Beach vs. Meta Materials | Hamilton Beach vs. Sphere 3D Corp | Hamilton Beach vs. Katapult Holdings | Hamilton Beach vs. Aquagold International |
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 CEOs Directory module to screen CEOs from public companies around the world.
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