Correlation Between Ford and Grays Leasing
Can any of the company-specific risk be diversified away by investing in both Ford and Grays Leasing 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 Grays Leasing into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Grays Leasing, you can compare the effects of market volatilities on Ford and Grays Leasing 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 Grays Leasing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Grays Leasing.
Diversification Opportunities for Ford and Grays Leasing
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Ford and Grays is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Grays Leasing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grays Leasing 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 Grays Leasing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grays Leasing has no effect on the direction of Ford i.e., Ford and Grays Leasing go up and down completely randomly.
Pair Corralation between Ford and Grays Leasing
Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the Grays Leasing. But the stock apears to be less risky and, when comparing its historical volatility, Ford Motor is 3.03 times less risky than Grays Leasing. The stock trades about 0.0 of its potential returns per unit of risk. The Grays Leasing is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 308.00 in Grays Leasing on November 2, 2024 and sell it today you would earn a total of 201.00 from holding Grays Leasing or generate 65.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 50.4% |
| Values | Daily Returns |
Ford Motor vs. Grays Leasing
Performance |
| Timeline |
| Ford Motor |
| Grays Leasing |
Ford and Grays Leasing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Grays Leasing
The main advantage of trading using opposite Ford and Grays Leasing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Grays Leasing 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 Grays Leasing will offset losses from the drop in Grays Leasing's long position.The idea behind Ford Motor and Grays Leasing 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.| Grays Leasing vs. Masood Textile Mills | Grays Leasing vs. Fauji Foods | Grays Leasing vs. KSB Pumps | Grays Leasing vs. Mari Petroleum |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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