Correlation Between Ford and Great-west Mfs
Can any of the company-specific risk be diversified away by investing in both Ford and Great-west Mfs 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 Mfs 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 Mfs International, you can compare the effects of market volatilities on Ford and Great-west Mfs 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 Mfs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Great-west Mfs.
Diversification Opportunities for Ford and Great-west Mfs
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ford and Great-west is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Great West Mfs International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Great West Mfs 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 Mfs. 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 Mfs has no effect on the direction of Ford i.e., Ford and Great-west Mfs go up and down completely randomly.
Pair Corralation between Ford and Great-west Mfs
Taking into account the 90-day investment horizon Ford Motor is expected to generate 2.69 times more return on investment than Great-west Mfs. However, Ford is 2.69 times more volatile than Great West Mfs International. It trades about 0.25 of its potential returns per unit of risk. Great West Mfs International is currently generating about -0.03 per unit of risk. If you would invest 1,008 in Ford Motor on September 2, 2024 and sell it today you would earn a total of 105.00 from holding Ford Motor or generate 10.42% 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. Great West Mfs International
Performance |
| Timeline |
| Ford Motor |
| Great West Mfs |
Ford and Great-west Mfs Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Great-west Mfs
The main advantage of trading using opposite Ford and Great-west Mfs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Great-west Mfs 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 Mfs will offset losses from the drop in Great-west Mfs' long position.The idea behind Ford Motor and Great West Mfs International 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.| Great-west Mfs vs. Great West Securefoundation Balanced | Great-west Mfs vs. Great West Lifetime 2020 | Great-west Mfs vs. Great West Lifetime 2020 | Great-west Mfs vs. Great West Lifetime 2020 |
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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