Correlation Between Ford and Ingles Markets
Can any of the company-specific risk be diversified away by investing in both Ford and Ingles Markets 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 Ingles Markets into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Ingles Markets Incorporated, you can compare the effects of market volatilities on Ford and Ingles Markets 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 Ingles Markets. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Ingles Markets.
Diversification Opportunities for Ford and Ingles Markets
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Ford and Ingles is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Ingles Markets Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ingles Markets 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 Ingles Markets. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ingles Markets has no effect on the direction of Ford i.e., Ford and Ingles Markets go up and down completely randomly.
Pair Corralation between Ford and Ingles Markets
Taking into account the 90-day investment horizon Ford Motor is expected to generate 1.44 times more return on investment than Ingles Markets. However, Ford is 1.44 times more volatile than Ingles Markets Incorporated. It trades about -0.01 of its potential returns per unit of risk. Ingles Markets Incorporated is currently generating about -0.05 per unit of risk. If you would invest 1,071 in Ford Motor on November 9, 2024 and sell it today you would lose (145.00) from holding Ford Motor or give up 13.54% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ford Motor vs. Ingles Markets Incorporated
Performance |
| Timeline |
| Ford Motor |
| Ingles Markets |
Ford and Ingles Markets Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Ingles Markets
The main advantage of trading using opposite Ford and Ingles Markets positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Ingles Markets 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 Ingles Markets will offset losses from the drop in Ingles Markets' long position.The idea behind Ford Motor and Ingles Markets Incorporated 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.| Ingles Markets vs. Weis Markets | Ingles Markets vs. Natural Grocers by | Ingles Markets vs. Grocery Outlet Holding | Ingles Markets vs. Village Super Market |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
Other Complementary Tools
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing |