Correlation Between Ford and Lonza Group
Can any of the company-specific risk be diversified away by investing in both Ford and Lonza 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 Lonza 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 Lonza Group AG, you can compare the effects of market volatilities on Ford and Lonza 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 Lonza Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Lonza Group.
Diversification Opportunities for Ford and Lonza Group
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ford and Lonza is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Lonza Group AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lonza Group AG 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 Lonza Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lonza Group AG has no effect on the direction of Ford i.e., Ford and Lonza Group go up and down completely randomly.
Pair Corralation between Ford and Lonza Group
Taking into account the 90-day investment horizon Ford is expected to generate 3.18 times less return on investment than Lonza Group. In addition to that, Ford is 1.07 times more volatile than Lonza Group AG. It trades about 0.01 of its total potential returns per unit of risk. Lonza Group AG is currently generating about 0.03 per unit of volatility. If you would invest 5,057 in Lonza Group AG on September 3, 2024 and sell it today you would earn a total of 931.00 from holding Lonza Group AG or generate 18.41% 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. Lonza Group AG
Performance |
| Timeline |
| Ford Motor |
| Lonza Group AG |
Ford and Lonza Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Lonza Group
The main advantage of trading using opposite Ford and Lonza Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Lonza 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 Lonza Group will offset losses from the drop in Lonza Group's long position.| Ford vs. GreenPower Motor | Ford vs. ZEEKR Intelligent Technology | Ford vs. Volcon Inc | Ford vs. Ford Motor |
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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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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