Correlation Between Ford and Guinness Atkinson
Can any of the company-specific risk be diversified away by investing in both Ford and Guinness Atkinson 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 Guinness Atkinson into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Guinness Atkinson Global, you can compare the effects of market volatilities on Ford and Guinness Atkinson 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 Guinness Atkinson. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Guinness Atkinson.
Diversification Opportunities for Ford and Guinness Atkinson
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Ford and Guinness is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Guinness Atkinson Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guinness Atkinson Global 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 Guinness Atkinson. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guinness Atkinson Global has no effect on the direction of Ford i.e., Ford and Guinness Atkinson go up and down completely randomly.
Pair Corralation between Ford and Guinness Atkinson
Taking into account the 90-day investment horizon Ford is expected to generate 13.61 times less return on investment than Guinness Atkinson. In addition to that, Ford is 2.22 times more volatile than Guinness Atkinson Global. It trades about 0.0 of its total potential returns per unit of risk. Guinness Atkinson Global is currently generating about 0.07 per unit of volatility. If you would invest 5,136 in Guinness Atkinson Global on August 26, 2024 and sell it today you would earn a total of 1,310 from holding Guinness Atkinson Global or generate 25.51% 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. Guinness Atkinson Global
Performance |
| Timeline |
| Ford Motor |
| Guinness Atkinson Global |
Ford and Guinness Atkinson Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Guinness Atkinson
The main advantage of trading using opposite Ford and Guinness Atkinson positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Guinness Atkinson 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 Guinness Atkinson will offset losses from the drop in Guinness Atkinson's long position.The idea behind Ford Motor and Guinness Atkinson Global 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.| Guinness Atkinson vs. Guinness Atkinson Global | Guinness Atkinson vs. Siit Dynamic Asset | Guinness Atkinson vs. Simt Sp 500 | Guinness Atkinson vs. Columbia Large Cap |
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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