Correlation Between Ford and Performance Food
Can any of the company-specific risk be diversified away by investing in both Ford and Performance Food 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 Performance Food into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Performance Food Group, you can compare the effects of market volatilities on Ford and Performance Food 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 Performance Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Performance Food.
Diversification Opportunities for Ford and Performance Food
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Ford and Performance is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Performance Food Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Performance Food 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 Performance Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Performance Food has no effect on the direction of Ford i.e., Ford and Performance Food go up and down completely randomly.
Pair Corralation between Ford and Performance Food
Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the Performance Food. In addition to that, Ford is 1.39 times more volatile than Performance Food Group. It trades about -0.02 of its total potential returns per unit of risk. Performance Food Group is currently generating about 0.09 per unit of volatility. If you would invest 6,500 in Performance Food Group on September 3, 2024 and sell it today you would earn a total of 1,750 from holding Performance Food Group or generate 26.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 97.65% |
| Values | Daily Returns |
Ford Motor vs. Performance Food Group
Performance |
| Timeline |
| Ford Motor |
| Performance Food |
Ford and Performance Food Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Performance Food
The main advantage of trading using opposite Ford and Performance Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Performance Food 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 Performance Food will offset losses from the drop in Performance Food's long position.| Ford vs. GreenPower Motor | Ford vs. ZEEKR Intelligent Technology | Ford vs. Volcon Inc | Ford vs. Ford Motor |
| Performance Food vs. Australian Agricultural | Performance Food vs. Sumitomo Mitsui Construction | Performance Food vs. Iridium Communications | Performance Food vs. Entravision Communications |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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