Correlation Between Ford and Thornburg International
Can any of the company-specific risk be diversified away by investing in both Ford and Thornburg International 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 Thornburg International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Thornburg International Growth, you can compare the effects of market volatilities on Ford and Thornburg International 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 Thornburg International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Thornburg International.
Diversification Opportunities for Ford and Thornburg International
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ford and Thornburg is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Thornburg International Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thornburg International 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 Thornburg International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thornburg International has no effect on the direction of Ford i.e., Ford and Thornburg International go up and down completely randomly.
Pair Corralation between Ford and Thornburg International
Taking into account the 90-day investment horizon Ford is expected to generate 1.29 times less return on investment than Thornburg International. In addition to that, Ford is 2.68 times more volatile than Thornburg International Growth. It trades about 0.01 of its total potential returns per unit of risk. Thornburg International Growth is currently generating about 0.03 per unit of volatility. If you would invest 2,213 in Thornburg International Growth on September 3, 2024 and sell it today you would earn a total of 269.00 from holding Thornburg International Growth or generate 12.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ford Motor vs. Thornburg International Growth
Performance |
| Timeline |
| Ford Motor |
| Thornburg International |
Ford and Thornburg International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Thornburg International
The main advantage of trading using opposite Ford and Thornburg International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Thornburg International 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 Thornburg International will offset losses from the drop in Thornburg International's long position.| Ford vs. GreenPower Motor | Ford vs. ZEEKR Intelligent Technology | Ford vs. Volcon Inc | Ford vs. Ford Motor |
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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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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