Correlation Between Ford and ATT
Can any of the company-specific risk be diversified away by investing in both Ford and ATT 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 ATT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and ATT Inc ELKS, you can compare the effects of market volatilities on Ford and ATT 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 ATT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and ATT.
Diversification Opportunities for Ford and ATT
Pay attention - limited upside
The 3 months correlation between Ford and ATT is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and ATT Inc ELKS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ATT Inc ELKS 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 ATT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ATT Inc ELKS has no effect on the direction of Ford i.e., Ford and ATT go up and down completely randomly.
Pair Corralation between Ford and ATT
If you would invest (100.00) in ATT Inc ELKS on January 10, 2025 and sell it today you would earn a total of 100.00 from holding ATT Inc ELKS or generate -100.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 0.0% |
| Values | Daily Returns |
Ford Motor vs. ATT Inc ELKS
Performance |
| Timeline |
| Ford Motor |
| ATT Inc ELKS |
Risk-Adjusted Performance
Very Weak
Weak | Strong |
Ford and ATT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and ATT
The main advantage of trading using opposite Ford and ATT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, ATT 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 ATT will offset losses from the drop in ATT's long position.The idea behind Ford Motor and ATT Inc ELKS 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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