Correlation Between Ford and AQ Group
Can any of the company-specific risk be diversified away by investing in both Ford and AQ Group 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 AQ Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and AQ Group AB, you can compare the effects of market volatilities on Ford and AQ Group 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 AQ Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and AQ Group.
Diversification Opportunities for Ford and AQ Group
Good diversification
The 3 months correlation between Ford and AQ Group is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and AQ Group AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AQ Group AB 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 AQ Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AQ Group AB has no effect on the direction of Ford i.e., Ford and AQ Group go up and down completely randomly.
Pair Corralation between Ford and AQ Group
Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the AQ Group. But the stock apears to be less risky and, when comparing its historical volatility, Ford Motor is 1.17 times less risky than AQ Group. The stock trades about -0.05 of its potential returns per unit of risk. The AQ Group AB is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 13,608 in AQ Group AB on October 25, 2024 and sell it today you would earn a total of 2,926 from holding AQ Group AB or generate 21.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 96.67% |
| Values | Daily Returns |
Ford Motor vs. AQ Group AB
Performance |
| Timeline |
| Ford Motor |
| AQ Group AB |
Ford and AQ Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and AQ Group
The main advantage of trading using opposite Ford and AQ Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, AQ Group 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 AQ Group will offset losses from the drop in AQ Group's long position.The idea behind Ford Motor and AQ Group AB 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.| AQ Group vs. Inwido AB | AQ Group vs. Bufab Holding AB | AQ Group vs. Beijer Alma AB | AQ Group vs. Addtech AB |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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