Correlation Between Ford and Grupo Mxico
Can any of the company-specific risk be diversified away by investing in both Ford and Grupo Mxico 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 Grupo Mxico into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Grupo Mxico SAB, you can compare the effects of market volatilities on Ford and Grupo Mxico 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 Grupo Mxico. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Grupo Mxico.
Diversification Opportunities for Ford and Grupo Mxico
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Ford and Grupo is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Grupo Mxico SAB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grupo Mxico SAB 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 Grupo Mxico. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grupo Mxico SAB has no effect on the direction of Ford i.e., Ford and Grupo Mxico go up and down completely randomly.
Pair Corralation between Ford and Grupo Mxico
Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the Grupo Mxico. But the stock apears to be less risky and, when comparing its historical volatility, Ford Motor is 1.88 times less risky than Grupo Mxico. The stock trades about 0.0 of its potential returns per unit of risk. The Grupo Mxico SAB is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 81.00 in Grupo Mxico SAB on October 29, 2024 and sell it today you would earn a total of 414.00 from holding Grupo Mxico SAB or generate 511.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 98.69% |
| Values | Daily Returns |
Ford Motor vs. Grupo Mxico SAB
Performance |
| Timeline |
| Ford Motor |
| Grupo Mxico SAB |
Ford and Grupo Mxico Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Grupo Mxico
The main advantage of trading using opposite Ford and Grupo Mxico positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Grupo Mxico 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 Grupo Mxico will offset losses from the drop in Grupo Mxico's long position.The idea behind Ford Motor and Grupo Mxico SAB 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.| Grupo Mxico vs. DAIRY FARM INTL | Grupo Mxico vs. Easy Software AG | Grupo Mxico vs. VITEC SOFTWARE GROUP | Grupo Mxico vs. MAGIC SOFTWARE ENTR |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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