Correlation Between Ford and Genic
Can any of the company-specific risk be diversified away by investing in both Ford and Genic 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 Genic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Genic Co, you can compare the effects of market volatilities on Ford and Genic 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 Genic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Genic.
Diversification Opportunities for Ford and Genic
Good diversification
The 3 months correlation between Ford and Genic is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Genic Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genic 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 Genic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Genic has no effect on the direction of Ford i.e., Ford and Genic go up and down completely randomly.
Pair Corralation between Ford and Genic
Taking into account the 90-day investment horizon Ford is expected to generate 34.38 times less return on investment than Genic. But when comparing it to its historical volatility, Ford Motor is 1.98 times less risky than Genic. It trades about 0.01 of its potential returns per unit of risk. Genic Co is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 495,000 in Genic Co on September 25, 2024 and sell it today you would earn a total of 1,805,000 from holding Genic Co or generate 364.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 96.62% |
| Values | Daily Returns |
Ford Motor vs. Genic Co
Performance |
| Timeline |
| Ford Motor |
| Genic |
Ford and Genic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Genic
The main advantage of trading using opposite Ford and Genic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Genic 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 Genic will offset losses from the drop in Genic's long position.The idea behind Ford Motor and Genic Co 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.| Genic vs. FoodNamoo | Genic vs. Polaris Office Corp | Genic vs. Korea Electronic Certification | Genic vs. Wave Electronics Co |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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