Correlation Between Ford and Credit Corp
Can any of the company-specific risk be diversified away by investing in both Ford and Credit Corp 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 Credit Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Credit Corp Group, you can compare the effects of market volatilities on Ford and Credit Corp 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 Credit Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Credit Corp.
Diversification Opportunities for Ford and Credit Corp
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Ford and Credit is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Credit Corp Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Credit Corp Group 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 Credit Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Credit Corp Group has no effect on the direction of Ford i.e., Ford and Credit Corp go up and down completely randomly.
Pair Corralation between Ford and Credit Corp
Taking into account the 90-day investment horizon Ford is expected to generate 1.19 times less return on investment than Credit Corp. But when comparing it to its historical volatility, Ford Motor is 1.13 times less risky than Credit Corp. It trades about 0.01 of its potential returns per unit of risk. Credit Corp Group is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 1,877 in Credit Corp Group on September 3, 2024 and sell it today you would lose (102.00) from holding Credit Corp Group or give up 5.43% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.2% |
| Values | Daily Returns |
Ford Motor vs. Credit Corp Group
Performance |
| Timeline |
| Ford Motor |
| Credit Corp Group |
Ford and Credit Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Credit Corp
The main advantage of trading using opposite Ford and Credit Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Credit Corp 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 Credit Corp will offset losses from the drop in Credit Corp's long position.| Ford vs. GreenPower Motor | Ford vs. ZEEKR Intelligent Technology | Ford vs. Volcon Inc | Ford vs. Ford Motor |
| Credit Corp vs. MA Financial Group | Credit Corp vs. Iron Road | Credit Corp vs. Super Retail Group | Credit Corp vs. Dexus Convenience Retail |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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