Correlation Between Ford and GoHealth
Can any of the company-specific risk be diversified away by investing in both Ford and GoHealth 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 GoHealth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and GoHealth, you can compare the effects of market volatilities on Ford and GoHealth 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 GoHealth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and GoHealth.
Diversification Opportunities for Ford and GoHealth
Very good diversification
The 3 months correlation between Ford and GoHealth is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and GoHealth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GoHealth 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 GoHealth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GoHealth has no effect on the direction of Ford i.e., Ford and GoHealth go up and down completely randomly.
Pair Corralation between Ford and GoHealth
Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the GoHealth. But the stock apears to be less risky and, when comparing its historical volatility, Ford Motor is 2.19 times less risky than GoHealth. The stock trades about -0.02 of its potential returns per unit of risk. The GoHealth is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 1,352 in GoHealth on November 8, 2024 and sell it today you would earn a total of 270.00 from holding GoHealth or generate 19.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ford Motor vs. GoHealth
Performance |
| Timeline |
| Ford Motor |
| GoHealth |
Ford and GoHealth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and GoHealth
The main advantage of trading using opposite Ford and GoHealth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, GoHealth 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 GoHealth will offset losses from the drop in GoHealth's long position.The idea behind Ford Motor and GoHealth 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.| GoHealth vs. Tian Ruixiang Holdings | GoHealth vs. Huize Holding | GoHealth vs. Selectquote | GoHealth vs. CorVel Corp |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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