Correlation Between Ford and Tecnoglass
Can any of the company-specific risk be diversified away by investing in both Ford and Tecnoglass 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 Tecnoglass into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Tecnoglass, you can compare the effects of market volatilities on Ford and Tecnoglass 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 Tecnoglass. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Tecnoglass.
Diversification Opportunities for Ford and Tecnoglass
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Ford and Tecnoglass is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Tecnoglass in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tecnoglass 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 Tecnoglass. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tecnoglass has no effect on the direction of Ford i.e., Ford and Tecnoglass go up and down completely randomly.
Pair Corralation between Ford and Tecnoglass
Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the Tecnoglass. But the stock apears to be less risky and, when comparing its historical volatility, Ford Motor is 1.01 times less risky than Tecnoglass. The stock trades about 0.0 of its potential returns per unit of risk. The Tecnoglass is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 6,914 in Tecnoglass on August 24, 2024 and sell it today you would earn a total of 869.00 from holding Tecnoglass or generate 12.57% 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. Tecnoglass
Performance |
| Timeline |
| Ford Motor |
| Tecnoglass |
Ford and Tecnoglass Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Tecnoglass
The main advantage of trading using opposite Ford and Tecnoglass positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Tecnoglass 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 Tecnoglass will offset losses from the drop in Tecnoglass' long position.The idea behind Ford Motor and Tecnoglass 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.| Tecnoglass vs. Atkore International Group | Tecnoglass vs. Clearfield | Tecnoglass vs. Lantheus Holdings | Tecnoglass vs. Allegro Microsystems |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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