Correlation Between Ford and Gevelot
Can any of the company-specific risk be diversified away by investing in both Ford and Gevelot 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 Gevelot into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Gevelot, you can compare the effects of market volatilities on Ford and Gevelot 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 Gevelot. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Gevelot.
Diversification Opportunities for Ford and Gevelot
Average diversification
The 3 months correlation between Ford and Gevelot is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Gevelot in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gevelot 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 Gevelot. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gevelot has no effect on the direction of Ford i.e., Ford and Gevelot go up and down completely randomly.
Pair Corralation between Ford and Gevelot
Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the Gevelot. In addition to that, Ford is 1.35 times more volatile than Gevelot. It trades about 0.0 of its total potential returns per unit of risk. Gevelot is currently generating about 0.01 per unit of volatility. If you would invest 19,155 in Gevelot on November 9, 2024 and sell it today you would lose (155.00) from holding Gevelot or give up 0.81% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 94.52% |
| Values | Daily Returns |
Ford Motor vs. Gevelot
Performance |
| Timeline |
| Ford Motor |
| Gevelot |
Ford and Gevelot Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Gevelot
The main advantage of trading using opposite Ford and Gevelot positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Gevelot 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 Gevelot will offset losses from the drop in Gevelot's long position.The idea behind Ford Motor and Gevelot 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.| Gevelot vs. Passat Socit Anonyme | Gevelot vs. Groupe Guillin SA | Gevelot vs. Jacques Bogart SA | Gevelot vs. VIEL Cie socit |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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