Correlation Between Ford and GSK Plc
Can any of the company-specific risk be diversified away by investing in both Ford and GSK Plc 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 GSK Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and GSK plc, you can compare the effects of market volatilities on Ford and GSK Plc 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 GSK Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and GSK Plc.
Diversification Opportunities for Ford and GSK Plc
Very good diversification
The 3 months correlation between Ford and GSK is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and GSK plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GSK plc 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 GSK Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GSK plc has no effect on the direction of Ford i.e., Ford and GSK Plc go up and down completely randomly.
Pair Corralation between Ford and GSK Plc
Taking into account the 90-day investment horizon Ford is expected to generate 2.49 times less return on investment than GSK Plc. In addition to that, Ford is 1.2 times more volatile than GSK plc. It trades about 0.01 of its total potential returns per unit of risk. GSK plc is currently generating about 0.03 per unit of volatility. If you would invest 3,551 in GSK plc on September 3, 2024 and sell it today you would earn a total of 556.00 from holding GSK plc or generate 15.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 87.68% |
| Values | Daily Returns |
Ford Motor vs. GSK plc
Performance |
| Timeline |
| Ford Motor |
| GSK plc |
Ford and GSK Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and GSK Plc
The main advantage of trading using opposite Ford and GSK Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, GSK Plc 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 GSK Plc will offset losses from the drop in GSK Plc's long position.| Ford vs. GreenPower Motor | Ford vs. ZEEKR Intelligent Technology | Ford vs. Volcon Inc | Ford vs. Ford Motor |
| GSK Plc vs. Palantir Technologies | GSK Plc vs. Dell Technologies | GSK Plc vs. Zoom Video Communications | GSK Plc vs. salesforce inc |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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