Correlation Between Ford and Marex Group
Can any of the company-specific risk be diversified away by investing in both Ford and Marex 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 Marex 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 Marex Group plc, you can compare the effects of market volatilities on Ford and Marex 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 Marex Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Marex Group.
Diversification Opportunities for Ford and Marex Group
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Ford and Marex is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Marex Group plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marex 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 Marex Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marex Group plc has no effect on the direction of Ford i.e., Ford and Marex Group go up and down completely randomly.
Pair Corralation between Ford and Marex Group
Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the Marex Group. In addition to that, Ford is 1.08 times more volatile than Marex Group plc. It trades about 0.0 of its total potential returns per unit of risk. Marex Group plc is currently generating about 0.17 per unit of volatility. If you would invest 1,852 in Marex Group plc on September 2, 2024 and sell it today you would earn a total of 1,076 from holding Marex Group plc or generate 58.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ford Motor vs. Marex Group plc
Performance |
| Timeline |
| Ford Motor |
| Marex Group plc |
Ford and Marex Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Marex Group
The main advantage of trading using opposite Ford and Marex Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Marex 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 Marex Group will offset losses from the drop in Marex Group's long position.The idea behind Ford Motor and Marex 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.| Marex Group vs. Lazard | Marex Group vs. PJT Partners | Marex Group vs. Houlihan Lokey | Marex Group vs. Perella Weinberg Partners |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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