Correlation Between Ford and Alibaba Group
Can any of the company-specific risk be diversified away by investing in both Ford and Alibaba Group 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 Alibaba Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Alibaba Group Holding, you can compare the effects of market volatilities on Ford and Alibaba Group 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 Alibaba Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Alibaba Group.
Diversification Opportunities for Ford and Alibaba Group
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ford and Alibaba is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Alibaba Group Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alibaba Group Holding 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 Alibaba Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alibaba Group Holding has no effect on the direction of Ford i.e., Ford and Alibaba Group go up and down completely randomly.
Pair Corralation between Ford and Alibaba Group
Taking into account the 90-day investment horizon Ford Motor is expected to generate 0.86 times more return on investment than Alibaba Group. However, Ford Motor is 1.16 times less risky than Alibaba Group. It trades about 0.01 of its potential returns per unit of risk. Alibaba Group Holding is currently generating about 0.0 per unit of risk. If you would invest 1,136 in Ford Motor on September 3, 2024 and sell it today you would lose (23.00) from holding Ford Motor or give up 2.02% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.14% |
| Values | Daily Returns |
Ford Motor vs. Alibaba Group Holding
Performance |
| Timeline |
| Ford Motor |
| Alibaba Group Holding |
Ford and Alibaba Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Alibaba Group
The main advantage of trading using opposite Ford and Alibaba Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Alibaba Group 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 Alibaba Group will offset losses from the drop in Alibaba Group's long position.| Ford vs. GreenPower Motor | Ford vs. ZEEKR Intelligent Technology | Ford vs. Volcon Inc | Ford vs. Ford Motor |
| Alibaba Group vs. Apple Inc | Alibaba Group vs. Apple Inc | Alibaba Group vs. Apple Inc | Alibaba Group vs. Apple Inc |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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