Correlation Between Ford and Great-west Loomis
Can any of the company-specific risk be diversified away by investing in both Ford and Great-west Loomis 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 Loomis 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 Loomis Sayles, you can compare the effects of market volatilities on Ford and Great-west Loomis 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 Loomis. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Great-west Loomis.
Diversification Opportunities for Ford and Great-west Loomis
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ford and Great-west is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Great West Loomis Sayles in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Great West Loomis 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 Loomis. 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 Loomis has no effect on the direction of Ford i.e., Ford and Great-west Loomis go up and down completely randomly.
Pair Corralation between Ford and Great-west Loomis
Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the Great-west Loomis. In addition to that, Ford is 1.91 times more volatile than Great West Loomis Sayles. It trades about 0.0 of its total potential returns per unit of risk. Great West Loomis Sayles is currently generating about 0.06 per unit of volatility. If you would invest 3,312 in Great West Loomis Sayles on August 31, 2024 and sell it today you would earn a total of 866.00 from holding Great West Loomis Sayles or generate 26.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.73% |
| Values | Daily Returns |
Ford Motor vs. Great West Loomis Sayles
Performance |
| Timeline |
| Ford Motor |
| Great West Loomis |
Ford and Great-west Loomis Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Great-west Loomis
The main advantage of trading using opposite Ford and Great-west Loomis positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Great-west Loomis 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 Loomis will offset losses from the drop in Great-west Loomis' long position.The idea behind Ford Motor and Great West Loomis Sayles 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 Loomis vs. Goldman Sachs Technology | Great-west Loomis vs. Hennessy Technology Fund | Great-west Loomis vs. Mfs Technology Fund | Great-west Loomis vs. Columbia Global Technology |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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