Correlation Between Ford and Guggenheim Limited
Can any of the company-specific risk be diversified away by investing in both Ford and Guggenheim Limited 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 Limited 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 Limited Duration, you can compare the effects of market volatilities on Ford and Guggenheim Limited 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 Limited. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Guggenheim Limited.
Diversification Opportunities for Ford and Guggenheim Limited
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ford and Guggenheim is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Guggenheim Limited Duration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guggenheim Limited 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 Limited. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guggenheim Limited has no effect on the direction of Ford i.e., Ford and Guggenheim Limited go up and down completely randomly.
Pair Corralation between Ford and Guggenheim Limited
Taking into account the 90-day investment horizon Ford Motor is expected to generate 18.16 times more return on investment than Guggenheim Limited. However, Ford is 18.16 times more volatile than Guggenheim Limited Duration. It trades about 0.03 of its potential returns per unit of risk. Guggenheim Limited Duration is currently generating about 0.2 per unit of risk. If you would invest 1,000.00 in Ford Motor on August 29, 2024 and sell it today you would earn a total of 110.00 from holding Ford Motor or generate 11.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Ford Motor vs. Guggenheim Limited Duration
Performance |
| Timeline |
| Ford Motor |
| Guggenheim Limited |
Ford and Guggenheim Limited Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Guggenheim Limited
The main advantage of trading using opposite Ford and Guggenheim Limited positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Guggenheim Limited 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 Limited will offset losses from the drop in Guggenheim Limited's long position.The idea behind Ford Motor and Guggenheim Limited Duration 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 Limited vs. Guggenheim Total Return | Guggenheim Limited vs. Guggenheim Floating Rate | Guggenheim Limited vs. Guggenheim Macro Opportunities | Guggenheim Limited vs. Guggenheim Limited Duration |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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