Correlation Between Ford and Global Techs
Can any of the company-specific risk be diversified away by investing in both Ford and Global Techs 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 Global Techs into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Global Techs, you can compare the effects of market volatilities on Ford and Global Techs 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 Global Techs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Global Techs.
Diversification Opportunities for Ford and Global Techs
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Ford and Global is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Global Techs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Techs 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 Global Techs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Techs has no effect on the direction of Ford i.e., Ford and Global Techs go up and down completely randomly.
Pair Corralation between Ford and Global Techs
If you would invest 1,015 in Ford Motor on September 1, 2024 and sell it today you would earn a total of 98.00 from holding Ford Motor or generate 9.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 4.76% |
| Values | Daily Returns |
Ford Motor vs. Global Techs
Performance |
| Timeline |
| Ford Motor |
| Global Techs |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Ford and Global Techs Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Global Techs
The main advantage of trading using opposite Ford and Global Techs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Global Techs 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 Global Techs will offset losses from the drop in Global Techs' long position.The idea behind Ford Motor and Global Techs 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.| Global Techs vs. 1847 Holdings LLC | Global Techs vs. Alliance Recovery | Global Techs vs. Agro Capital Management | Global Techs vs. Ayala |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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