Correlation Between Ford and Global Dividend
Can any of the company-specific risk be diversified away by investing in both Ford and Global Dividend 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 Dividend 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 Dividend Growth, you can compare the effects of market volatilities on Ford and Global Dividend 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 Dividend. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Global Dividend.
Diversification Opportunities for Ford and Global Dividend
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Ford and Global is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Global Dividend Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Dividend Growth 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 Dividend. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Dividend Growth has no effect on the direction of Ford i.e., Ford and Global Dividend go up and down completely randomly.
Pair Corralation between Ford and Global Dividend
Taking into account the 90-day investment horizon Ford is expected to generate 3.85 times less return on investment than Global Dividend. In addition to that, Ford is 1.88 times more volatile than Global Dividend Growth. It trades about 0.03 of its total potential returns per unit of risk. Global Dividend Growth is currently generating about 0.19 per unit of volatility. If you would invest 1,137 in Global Dividend Growth on August 25, 2024 and sell it today you would earn a total of 70.00 from holding Global Dividend Growth or generate 6.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ford Motor vs. Global Dividend Growth
Performance |
| Timeline |
| Ford Motor |
| Global Dividend Growth |
Ford and Global Dividend Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Global Dividend
The main advantage of trading using opposite Ford and Global Dividend positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Global Dividend 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 Dividend will offset losses from the drop in Global Dividend's long position.The idea behind Ford Motor and Global Dividend Growth 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 Dividend vs. E Split Corp | Global Dividend vs. Brompton Split Banc | Global Dividend vs. Life Banc Split | Global Dividend vs. Real Estate E Commerce |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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