Correlation Between Ford and AdvisorShares Gerber
Can any of the company-specific risk be diversified away by investing in both Ford and AdvisorShares Gerber 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 AdvisorShares Gerber into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and AdvisorShares Gerber Kawasaki, you can compare the effects of market volatilities on Ford and AdvisorShares Gerber 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 AdvisorShares Gerber. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and AdvisorShares Gerber.
Diversification Opportunities for Ford and AdvisorShares Gerber
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Ford and AdvisorShares is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and AdvisorShares Gerber Kawasaki in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AdvisorShares Gerber 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 AdvisorShares Gerber. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AdvisorShares Gerber has no effect on the direction of Ford i.e., Ford and AdvisorShares Gerber go up and down completely randomly.
Pair Corralation between Ford and AdvisorShares Gerber
Taking into account the 90-day investment horizon Ford Motor is expected to generate 1.99 times more return on investment than AdvisorShares Gerber. However, Ford is 1.99 times more volatile than AdvisorShares Gerber Kawasaki. It trades about 0.17 of its potential returns per unit of risk. AdvisorShares Gerber Kawasaki is currently generating about 0.13 per unit of risk. If you would invest 1,033 in Ford Motor on August 31, 2024 and sell it today you would earn a total of 77.00 from holding Ford Motor or generate 7.45% 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. AdvisorShares Gerber Kawasaki
Performance |
| Timeline |
| Ford Motor |
| AdvisorShares Gerber |
Ford and AdvisorShares Gerber Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and AdvisorShares Gerber
The main advantage of trading using opposite Ford and AdvisorShares Gerber positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, AdvisorShares Gerber 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 AdvisorShares Gerber will offset losses from the drop in AdvisorShares Gerber's long position.The idea behind Ford Motor and AdvisorShares Gerber Kawasaki 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.| AdvisorShares Gerber vs. Vanguard Growth Index | AdvisorShares Gerber vs. iShares Russell 1000 | AdvisorShares Gerber vs. iShares SP 500 | AdvisorShares Gerber vs. SPDR Portfolio SP |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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