Correlation Between Ford and Kingspan Group
Can any of the company-specific risk be diversified away by investing in both Ford and Kingspan Group 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 Kingspan Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Kingspan Group PLC, you can compare the effects of market volatilities on Ford and Kingspan Group 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 Kingspan Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Kingspan Group.
Diversification Opportunities for Ford and Kingspan Group
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ford and Kingspan is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Kingspan Group PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kingspan Group PLC 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 Kingspan Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kingspan Group PLC has no effect on the direction of Ford i.e., Ford and Kingspan Group go up and down completely randomly.
Pair Corralation between Ford and Kingspan Group
Taking into account the 90-day investment horizon Ford is expected to generate 2.07 times less return on investment than Kingspan Group. In addition to that, Ford is 1.06 times more volatile than Kingspan Group PLC. It trades about 0.02 of its total potential returns per unit of risk. Kingspan Group PLC is currently generating about 0.04 per unit of volatility. If you would invest 5,774 in Kingspan Group PLC on August 28, 2024 and sell it today you would earn a total of 1,973 from holding Kingspan Group PLC or generate 34.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ford Motor vs. Kingspan Group PLC
Performance |
| Timeline |
| Ford Motor |
| Kingspan Group PLC |
Ford and Kingspan Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Kingspan Group
The main advantage of trading using opposite Ford and Kingspan Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Kingspan Group 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 Kingspan Group will offset losses from the drop in Kingspan Group's long position.The idea behind Ford Motor and Kingspan Group PLC 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.| Kingspan Group vs. Trane Technologies plc | Kingspan Group vs. Carrier Global Corp | Kingspan Group vs. Johnson Controls International | Kingspan Group vs. Lennox International |
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 Stocks Directory module to find actively traded stocks across global markets.
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