Correlation Between Ford and Guggenheim Floating
Can any of the company-specific risk be diversified away by investing in both Ford and Guggenheim Floating 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 Guggenheim Floating into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Guggenheim Floating Rate, you can compare the effects of market volatilities on Ford and Guggenheim Floating 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 Guggenheim Floating. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Guggenheim Floating.
Diversification Opportunities for Ford and Guggenheim Floating
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Ford and Guggenheim is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Guggenheim Floating Rate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guggenheim Floating Rate 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 Guggenheim Floating. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guggenheim Floating Rate has no effect on the direction of Ford i.e., Ford and Guggenheim Floating go up and down completely randomly.
Pair Corralation between Ford and Guggenheim Floating
Taking into account the 90-day investment horizon Ford Motor is expected to generate 51.12 times more return on investment than Guggenheim Floating. However, Ford is 51.12 times more volatile than Guggenheim Floating Rate. It trades about 0.23 of its potential returns per unit of risk. Guggenheim Floating Rate is currently generating about 0.25 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 | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ford Motor vs. Guggenheim Floating Rate
Performance |
| Timeline |
| Ford Motor |
| Guggenheim Floating Rate |
Ford and Guggenheim Floating Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Guggenheim Floating
The main advantage of trading using opposite Ford and Guggenheim Floating positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Guggenheim Floating 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 Guggenheim Floating will offset losses from the drop in Guggenheim Floating's long position.The idea behind Ford Motor and Guggenheim Floating Rate 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.| Guggenheim Floating vs. Guggenheim Floating Rate | Guggenheim Floating vs. Guggenheim Floating Rate | Guggenheim Floating vs. Guggenheim Floating Rate | Guggenheim Floating vs. Guggenheim Macro Opportunities |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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