Correlation Between Ford and Aqr Global
Can any of the company-specific risk be diversified away by investing in both Ford and Aqr Global 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 Aqr Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Aqr Global Macro, you can compare the effects of market volatilities on Ford and Aqr Global 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 Aqr Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Aqr Global.
Diversification Opportunities for Ford and Aqr Global
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Ford and Aqr is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Aqr Global Macro in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aqr Global Macro 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 Aqr Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aqr Global Macro has no effect on the direction of Ford i.e., Ford and Aqr Global go up and down completely randomly.
Pair Corralation between Ford and Aqr Global
Taking into account the 90-day investment horizon Ford Motor is expected to generate 4.11 times more return on investment than Aqr Global. However, Ford is 4.11 times more volatile than Aqr Global Macro. It trades about 0.02 of its potential returns per unit of risk. Aqr Global Macro is currently generating about 0.01 per unit of risk. If you would invest 1,029 in Ford Motor on September 3, 2024 and sell it today you would earn a total of 69.00 from holding Ford Motor or generate 6.71% 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. Aqr Global Macro
Performance |
| Timeline |
| Ford Motor |
| Aqr Global Macro |
Ford and Aqr Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Aqr Global
The main advantage of trading using opposite Ford and Aqr Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Aqr Global 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 Aqr Global will offset losses from the drop in Aqr Global'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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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