Correlation Between Ford and GreenFirst Forest
Can any of the company-specific risk be diversified away by investing in both Ford and GreenFirst Forest 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 GreenFirst Forest into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and GreenFirst Forest Products, you can compare the effects of market volatilities on Ford and GreenFirst Forest 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 GreenFirst Forest. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and GreenFirst Forest.
Diversification Opportunities for Ford and GreenFirst Forest
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between Ford and GreenFirst is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and GreenFirst Forest Products in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GreenFirst Forest 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 GreenFirst Forest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GreenFirst Forest has no effect on the direction of Ford i.e., Ford and GreenFirst Forest go up and down completely randomly.
Pair Corralation between Ford and GreenFirst Forest
Taking into account the 90-day investment horizon Ford is expected to generate 1015.24 times less return on investment than GreenFirst Forest. But when comparing it to its historical volatility, Ford Motor is 79.94 times less risky than GreenFirst Forest. It trades about 0.01 of its potential returns per unit of risk. GreenFirst Forest Products is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 1,060 in GreenFirst Forest Products on August 31, 2024 and sell it today you would lose (665.00) from holding GreenFirst Forest Products or give up 62.74% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.79% |
| Values | Daily Returns |
Ford Motor vs. GreenFirst Forest Products
Performance |
| Timeline |
| Ford Motor |
| GreenFirst Forest |
Ford and GreenFirst Forest Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and GreenFirst Forest
The main advantage of trading using opposite Ford and GreenFirst Forest positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, GreenFirst Forest 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 GreenFirst Forest will offset losses from the drop in GreenFirst Forest's long position.The idea behind Ford Motor and GreenFirst Forest Products 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.| GreenFirst Forest vs. Fundamental Global | GreenFirst Forest vs. GreenFirst Forest Products | GreenFirst Forest vs. Galaxy Gaming | GreenFirst Forest vs. OppFi Inc |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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