Correlation Between Ford and Amcor Plc
Can any of the company-specific risk be diversified away by investing in both Ford and Amcor Plc 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 Amcor Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Amcor plc, you can compare the effects of market volatilities on Ford and Amcor Plc 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 Amcor Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Amcor Plc.
Diversification Opportunities for Ford and Amcor Plc
Significant diversification
The 3 months correlation between Ford and Amcor is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Amcor plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amcor plc 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 Amcor Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amcor plc has no effect on the direction of Ford i.e., Ford and Amcor Plc go up and down completely randomly.
Pair Corralation between Ford and Amcor Plc
Taking into account the 90-day investment horizon Ford is expected to generate 4.91 times less return on investment than Amcor Plc. But when comparing it to its historical volatility, Ford Motor is 1.02 times less risky than Amcor Plc. It trades about 0.0 of its potential returns per unit of risk. Amcor plc is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 951.00 in Amcor plc on September 12, 2024 and sell it today you would earn a total of 15.00 from holding Amcor plc or generate 1.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ford Motor vs. Amcor plc
Performance |
| Timeline |
| Ford Motor |
| Amcor plc |
Ford and Amcor Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Amcor Plc
The main advantage of trading using opposite Ford and Amcor Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Amcor Plc 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 Amcor Plc will offset losses from the drop in Amcor Plc's long position.The idea behind Ford Motor and Amcor plc 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.| Amcor Plc vs. THAI BEVERAGE | Amcor Plc vs. SCANSOURCE | Amcor Plc vs. DATANG INTL POW | Amcor Plc vs. National Storage Affiliates |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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