Correlation Between Ford and Gamco Global
Can any of the company-specific risk be diversified away by investing in both Ford and Gamco Global 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 Gamco Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Gamco Global Opportunity, you can compare the effects of market volatilities on Ford and Gamco Global 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 Gamco Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Gamco Global.
Diversification Opportunities for Ford and Gamco Global
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ford and Gamco is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Gamco Global Opportunity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gamco Global Opportunity 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 Gamco Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gamco Global Opportunity has no effect on the direction of Ford i.e., Ford and Gamco Global go up and down completely randomly.
Pair Corralation between Ford and Gamco Global
Taking into account the 90-day investment horizon Ford Motor is expected to generate 2.28 times more return on investment than Gamco Global. However, Ford is 2.28 times more volatile than Gamco Global Opportunity. It trades about 0.13 of its potential returns per unit of risk. Gamco Global Opportunity is currently generating about 0.16 per unit of risk. If you would invest 965.00 in Ford Motor on November 3, 2024 and sell it today you would earn a total of 43.00 from holding Ford Motor or generate 4.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ford Motor vs. Gamco Global Opportunity
Performance |
| Timeline |
| Ford Motor |
| Gamco Global Opportunity |
Ford and Gamco Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Gamco Global
The main advantage of trading using opposite Ford and Gamco Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Gamco Global 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 Gamco Global will offset losses from the drop in Gamco Global's long position.The idea behind Ford Motor and Gamco Global Opportunity 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.| Gamco Global vs. Voya Solution Conservative | Gamco Global vs. Madison Diversified Income | Gamco Global vs. Blackrock Conservative Prprdptfinstttnl | Gamco Global vs. Calvert Conservative Allocation |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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