Correlation Between Ford and Great-west Lifetime
Can any of the company-specific risk be diversified away by investing in both Ford and Great-west Lifetime 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 Great-west Lifetime into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Great West Lifetime 2020, you can compare the effects of market volatilities on Ford and Great-west Lifetime 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 Great-west Lifetime. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Great-west Lifetime.
Diversification Opportunities for Ford and Great-west Lifetime
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Ford and Great-west is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Great West Lifetime 2020 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Great West Lifetime 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 Great-west Lifetime. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Great West Lifetime has no effect on the direction of Ford i.e., Ford and Great-west Lifetime go up and down completely randomly.
Pair Corralation between Ford and Great-west Lifetime
Taking into account the 90-day investment horizon Ford is expected to generate 1.25 times less return on investment than Great-west Lifetime. In addition to that, Ford is 5.25 times more volatile than Great West Lifetime 2020. It trades about 0.01 of its total potential returns per unit of risk. Great West Lifetime 2020 is currently generating about 0.06 per unit of volatility. If you would invest 950.00 in Great West Lifetime 2020 on September 3, 2024 and sell it today you would earn a total of 125.00 from holding Great West Lifetime 2020 or generate 13.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ford Motor vs. Great West Lifetime 2020
Performance |
| Timeline |
| Ford Motor |
| Great West Lifetime |
Ford and Great-west Lifetime Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Great-west Lifetime
The main advantage of trading using opposite Ford and Great-west Lifetime positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Great-west Lifetime 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 Great-west Lifetime will offset losses from the drop in Great-west Lifetime's long position.| Ford vs. GreenPower Motor | Ford vs. ZEEKR Intelligent Technology | Ford vs. Volcon Inc | Ford vs. Ford Motor |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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