Correlation Between Ford and EFG International
Can any of the company-specific risk be diversified away by investing in both Ford and EFG International 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 EFG International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and EFG International AG, you can compare the effects of market volatilities on Ford and EFG International 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 EFG International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and EFG International.
Diversification Opportunities for Ford and EFG International
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Ford and EFG is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and EFG International AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EFG International 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 EFG International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EFG International has no effect on the direction of Ford i.e., Ford and EFG International go up and down completely randomly.
Pair Corralation between Ford and EFG International
Taking into account the 90-day investment horizon Ford is expected to generate 6.8 times less return on investment than EFG International. In addition to that, Ford is 1.15 times more volatile than EFG International AG. It trades about 0.01 of its total potential returns per unit of risk. EFG International AG is currently generating about 0.09 per unit of volatility. If you would invest 733.00 in EFG International AG on September 19, 2024 and sell it today you would earn a total of 647.00 from holding EFG International AG or generate 88.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 85.48% |
| Values | Daily Returns |
Ford Motor vs. EFG International AG
Performance |
| Timeline |
| Ford Motor |
| EFG International |
Ford and EFG International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and EFG International
The main advantage of trading using opposite Ford and EFG International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, EFG International 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 EFG International will offset losses from the drop in EFG International's long position.The idea behind Ford Motor and EFG International AG 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.| EFG International vs. Bank of America | EFG International vs. Citigroup | EFG International vs. JPMorgan Chase Co | EFG International vs. Wells Fargo |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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