Correlation Between Ford and Societe Generale
Can any of the company-specific risk be diversified away by investing in both Ford and Societe Generale 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 Societe Generale into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Societe Generale ADR, you can compare the effects of market volatilities on Ford and Societe Generale 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 Societe Generale. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Societe Generale.
Diversification Opportunities for Ford and Societe Generale
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Ford and Societe is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Societe Generale ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Societe Generale ADR 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 Societe Generale. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Societe Generale ADR has no effect on the direction of Ford i.e., Ford and Societe Generale go up and down completely randomly.
Pair Corralation between Ford and Societe Generale
Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the Societe Generale. In addition to that, Ford is 1.23 times more volatile than Societe Generale ADR. It trades about 0.0 of its total potential returns per unit of risk. Societe Generale ADR is currently generating about 0.02 per unit of volatility. If you would invest 485.00 in Societe Generale ADR on August 31, 2024 and sell it today you would earn a total of 51.00 from holding Societe Generale ADR or generate 10.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.73% |
| Values | Daily Returns |
Ford Motor vs. Societe Generale ADR
Performance |
| Timeline |
| Ford Motor |
| Societe Generale ADR |
Ford and Societe Generale Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Societe Generale
The main advantage of trading using opposite Ford and Societe Generale positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Societe Generale 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 Societe Generale will offset losses from the drop in Societe Generale's long position.The idea behind Ford Motor and Societe Generale ADR 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.| Societe Generale vs. BNP Paribas SA | Societe Generale vs. Credit Agricole SA | Societe Generale vs. Intesa Sanpaolo SpA | Societe Generale vs. Commerzbank AG PK |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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