Correlation Between Ford and Global X
Can any of the company-specific risk be diversified away by investing in both Ford and Global X 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 Global X into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Global X SP, you can compare the effects of market volatilities on Ford and Global X 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 Global X. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Global X.
Diversification Opportunities for Ford and Global X
Very good diversification
The 3 months correlation between Ford and Global is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Global X SP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X SP 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 Global X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global X SP has no effect on the direction of Ford i.e., Ford and Global X go up and down completely randomly.
Pair Corralation between Ford and Global X
Taking into account the 90-day investment horizon Ford is expected to generate 1.91 times less return on investment than Global X. In addition to that, Ford is 1.98 times more volatile than Global X SP. It trades about 0.01 of its total potential returns per unit of risk. Global X SP is currently generating about 0.04 per unit of volatility. If you would invest 2,503 in Global X SP on August 26, 2024 and sell it today you would earn a total of 544.00 from holding Global X SP or generate 21.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.99% |
| Values | Daily Returns |
Ford Motor vs. Global X SP
Performance |
| Timeline |
| Ford Motor |
| Global X SP |
Ford and Global X Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Global X
The main advantage of trading using opposite Ford and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Global X 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 Global X will offset losses from the drop in Global X's long position.The idea behind Ford Motor and Global X SP 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.| Global X vs. Dimensional Core Equity | Global X vs. Dimensional Emerging Core | Global X vs. Dimensional Targeted Value | Global X vs. Dimensional Small Cap |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
Other Complementary Tools
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities |