Correlation Between Ford and Greif Bros
Can any of the company-specific risk be diversified away by investing in both Ford and Greif Bros 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 Greif Bros into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Greif Bros, you can compare the effects of market volatilities on Ford and Greif Bros 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 Greif Bros. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Greif Bros.
Diversification Opportunities for Ford and Greif Bros
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Ford and Greif is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Greif Bros in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Greif Bros 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 Greif Bros. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Greif Bros has no effect on the direction of Ford i.e., Ford and Greif Bros go up and down completely randomly.
Pair Corralation between Ford and Greif Bros
Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the Greif Bros. In addition to that, Ford is 1.93 times more volatile than Greif Bros. It trades about -0.09 of its total potential returns per unit of risk. Greif Bros is currently generating about 0.16 per unit of volatility. If you would invest 5,966 in Greif Bros on November 9, 2024 and sell it today you would earn a total of 235.00 from holding Greif Bros or generate 3.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ford Motor vs. Greif Bros
Performance |
| Timeline |
| Ford Motor |
| Greif Bros |
Ford and Greif Bros Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Greif Bros
The main advantage of trading using opposite Ford and Greif Bros positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Greif Bros 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 Greif Bros will offset losses from the drop in Greif Bros' long position.The idea behind Ford Motor and Greif Bros 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.| Greif Bros vs. Silgan Holdings | Greif Bros vs. AptarGroup | Greif Bros vs. Sonoco Products | Greif Bros vs. Graphic Packaging Holding |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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