Correlation Between Ford and GREENLIGHT CAP
Can any of the company-specific risk be diversified away by investing in both Ford and GREENLIGHT CAP 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 GREENLIGHT CAP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and GREENLIGHT CAP RE, you can compare the effects of market volatilities on Ford and GREENLIGHT CAP 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 GREENLIGHT CAP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and GREENLIGHT CAP.
Diversification Opportunities for Ford and GREENLIGHT CAP
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Ford and GREENLIGHT is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and GREENLIGHT CAP RE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GREENLIGHT CAP RE 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 GREENLIGHT CAP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GREENLIGHT CAP RE has no effect on the direction of Ford i.e., Ford and GREENLIGHT CAP go up and down completely randomly.
Pair Corralation between Ford and GREENLIGHT CAP
Taking into account the 90-day investment horizon Ford Motor is expected to generate 1.08 times more return on investment than GREENLIGHT CAP. However, Ford is 1.08 times more volatile than GREENLIGHT CAP RE. It trades about 0.09 of its potential returns per unit of risk. GREENLIGHT CAP RE is currently generating about -0.07 per unit of risk. If you would invest 988.00 in Ford Motor on October 29, 2024 and sell it today you would earn a total of 24.00 from holding Ford Motor or generate 2.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 94.74% |
| Values | Daily Returns |
Ford Motor vs. GREENLIGHT CAP RE
Performance |
| Timeline |
| Ford Motor |
| GREENLIGHT CAP RE |
Ford and GREENLIGHT CAP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and GREENLIGHT CAP
The main advantage of trading using opposite Ford and GREENLIGHT CAP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, GREENLIGHT CAP 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 GREENLIGHT CAP will offset losses from the drop in GREENLIGHT CAP's long position.The idea behind Ford Motor and GREENLIGHT CAP RE 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.| GREENLIGHT CAP vs. TELECOM ITALIA | GREENLIGHT CAP vs. FRACTAL GAMING GROUP | GREENLIGHT CAP vs. HUTCHISON TELECOMM | GREENLIGHT CAP vs. Scientific Games |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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