Correlation Between Ford and The Gabelli
Can any of the company-specific risk be diversified away by investing in both Ford and The Gabelli 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 The Gabelli into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and The Gabelli Abc, you can compare the effects of market volatilities on Ford and The Gabelli 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 The Gabelli. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and The Gabelli.
Diversification Opportunities for Ford and The Gabelli
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Ford and The is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and The Gabelli Abc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gabelli Abc 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 The Gabelli. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gabelli Abc has no effect on the direction of Ford i.e., Ford and The Gabelli go up and down completely randomly.
Pair Corralation between Ford and The Gabelli
Taking into account the 90-day investment horizon Ford Motor is expected to generate 7.62 times more return on investment than The Gabelli. However, Ford is 7.62 times more volatile than The Gabelli Abc. It trades about 0.23 of its potential returns per unit of risk. The Gabelli Abc is currently generating about 0.37 per unit of risk. If you would invest 1,015 in Ford Motor on September 1, 2024 and sell it today you would earn a total of 98.00 from holding Ford Motor or generate 9.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Ford Motor vs. The Gabelli Abc
Performance |
| Timeline |
| Ford Motor |
| Gabelli Abc |
Ford and The Gabelli Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and The Gabelli
The main advantage of trading using opposite Ford and The Gabelli positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, The Gabelli 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 The Gabelli will offset losses from the drop in The Gabelli's long position.The idea behind Ford Motor and The Gabelli Abc 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.| The Gabelli vs. Blackrock Moderate Prepared | The Gabelli vs. Tiaa Cref Lifestyle Moderate | The Gabelli vs. American Funds Retirement | The Gabelli vs. Franklin Lifesmart Retirement |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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