Correlation Between Ford and AFC Gamma
Can any of the company-specific risk be diversified away by investing in both Ford and AFC Gamma 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 AFC Gamma into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and AFC Gamma, you can compare the effects of market volatilities on Ford and AFC Gamma 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 AFC Gamma. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and AFC Gamma.
Diversification Opportunities for Ford and AFC Gamma
Very weak diversification
The 3 months correlation between Ford and AFC is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and AFC Gamma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AFC Gamma 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 AFC Gamma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AFC Gamma has no effect on the direction of Ford i.e., Ford and AFC Gamma go up and down completely randomly.
Pair Corralation between Ford and AFC Gamma
Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the AFC Gamma. In addition to that, Ford is 1.11 times more volatile than AFC Gamma. It trades about 0.0 of its total potential returns per unit of risk. AFC Gamma is currently generating about 0.02 per unit of volatility. If you would invest 752.00 in AFC Gamma on November 2, 2024 and sell it today you would earn a total of 65.00 from holding AFC Gamma or generate 8.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ford Motor vs. AFC Gamma
Performance |
| Timeline |
| Ford Motor |
| AFC Gamma |
Ford and AFC Gamma Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and AFC Gamma
The main advantage of trading using opposite Ford and AFC Gamma positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, AFC Gamma 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 AFC Gamma will offset losses from the drop in AFC Gamma's long position.The idea behind Ford Motor and AFC Gamma 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.| AFC Gamma vs. Newlake Capital Partners | AFC Gamma vs. SBA Communications Corp | AFC Gamma vs. Gladstone Land | AFC Gamma vs. Lamar Advertising |
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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