Correlation Between Ford and Guinness Atkinson
Can any of the company-specific risk be diversified away by investing in both Ford and Guinness Atkinson 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 Guinness Atkinson into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Guinness Atkinson Asset, you can compare the effects of market volatilities on Ford and Guinness Atkinson 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 Guinness Atkinson. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Guinness Atkinson.
Diversification Opportunities for Ford and Guinness Atkinson
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between Ford and Guinness is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Guinness Atkinson Asset in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guinness Atkinson Asset 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 Guinness Atkinson. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guinness Atkinson Asset has no effect on the direction of Ford i.e., Ford and Guinness Atkinson go up and down completely randomly.
Pair Corralation between Ford and Guinness Atkinson
Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the Guinness Atkinson. In addition to that, Ford is 1.89 times more volatile than Guinness Atkinson Asset. It trades about 0.0 of its total potential returns per unit of risk. Guinness Atkinson Asset is currently generating about 0.01 per unit of volatility. If you would invest 1,534 in Guinness Atkinson Asset on September 14, 2024 and sell it today you would earn a total of 4.00 from holding Guinness Atkinson Asset or generate 0.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 88.76% |
| Values | Daily Returns |
Ford Motor vs. Guinness Atkinson Asset
Performance |
| Timeline |
| Ford Motor |
| Guinness Atkinson Asset |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Good
Ford and Guinness Atkinson Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Guinness Atkinson
The main advantage of trading using opposite Ford and Guinness Atkinson positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Guinness Atkinson 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 Guinness Atkinson will offset losses from the drop in Guinness Atkinson's long position.The idea behind Ford Motor and Guinness Atkinson Asset 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.| Guinness Atkinson vs. SmartETFs Smart Transportation | Guinness Atkinson vs. Global X Thematic | Guinness Atkinson vs. Franklin Disruptive Commerce |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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