Correlation Between Ford and Ab Global
Can any of the company-specific risk be diversified away by investing in both Ford and Ab Global 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 Ab Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Ab Global Bond, you can compare the effects of market volatilities on Ford and Ab Global 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 Ab Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Ab Global.
Diversification Opportunities for Ford and Ab Global
Very good diversification
The 3 months correlation between Ford and ANAYX is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Ab Global Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ab Global Bond 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 Ab Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ab Global Bond has no effect on the direction of Ford i.e., Ford and Ab Global go up and down completely randomly.
Pair Corralation between Ford and Ab Global
Taking into account the 90-day investment horizon Ford Motor is expected to generate 8.77 times more return on investment than Ab Global. However, Ford is 8.77 times more volatile than Ab Global Bond. It trades about 0.02 of its potential returns per unit of risk. Ab Global Bond is currently generating about 0.05 per unit of risk. If you would invest 1,095 in Ford Motor on August 28, 2024 and sell it today you would earn a total of 45.00 from holding Ford Motor or generate 4.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ford Motor vs. Ab Global Bond
Performance |
| Timeline |
| Ford Motor |
| Ab Global Bond |
Ford and Ab Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Ab Global
The main advantage of trading using opposite Ford and Ab Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Ab Global 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 Ab Global will offset losses from the drop in Ab Global's long position.The idea behind Ford Motor and Ab Global Bond 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.| Ab Global vs. Icon Financial Fund | Ab Global vs. Davis Financial Fund | Ab Global vs. Royce Global Financial | Ab Global vs. Prudential Jennison Financial |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
Other Complementary Tools
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation |