Correlation Between Ford and SG Capital
Can any of the company-specific risk be diversified away by investing in both Ford and SG Capital 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 SG Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and SG Capital PCL, you can compare the effects of market volatilities on Ford and SG Capital 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 SG Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and SG Capital.
Diversification Opportunities for Ford and SG Capital
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ford and SGC is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and SG Capital PCL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SG Capital PCL 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 SG Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SG Capital PCL has no effect on the direction of Ford i.e., Ford and SG Capital go up and down completely randomly.
Pair Corralation between Ford and SG Capital
Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the SG Capital. But the stock apears to be less risky and, when comparing its historical volatility, Ford Motor is 1.93 times less risky than SG Capital. The stock trades about -0.01 of its potential returns per unit of risk. The SG Capital PCL is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 132.00 in SG Capital PCL on September 3, 2024 and sell it today you would lose (1.00) from holding SG Capital PCL or give up 0.76% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 97.95% |
| Values | Daily Returns |
Ford Motor vs. SG Capital PCL
Performance |
| Timeline |
| Ford Motor |
| SG Capital PCL |
Ford and SG Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and SG Capital
The main advantage of trading using opposite Ford and SG Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, SG Capital 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 SG Capital will offset losses from the drop in SG Capital's long position.| Ford vs. GreenPower Motor | Ford vs. ZEEKR Intelligent Technology | Ford vs. Volcon Inc | Ford vs. Ford Motor |
| SG Capital vs. Delta Electronics Public | SG Capital vs. Delta Electronics Public | SG Capital vs. Airports of Thailand | SG Capital vs. Airports of Thailand |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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