Correlation Between Ford and Under Armour
Can any of the company-specific risk be diversified away by investing in both Ford and Under Armour 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 Under Armour into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Under Armour, you can compare the effects of market volatilities on Ford and Under Armour 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 Under Armour. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Under Armour.
Diversification Opportunities for Ford and Under Armour
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Ford and Under is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Under Armour in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Under Armour 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 Under Armour. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Under Armour has no effect on the direction of Ford i.e., Ford and Under Armour go up and down completely randomly.
Pair Corralation between Ford and Under Armour
Taking into account the 90-day investment horizon Ford is expected to generate 4.2 times less return on investment than Under Armour. But when comparing it to its historical volatility, Ford Motor is 2.32 times less risky than Under Armour. It trades about 0.05 of its potential returns per unit of risk. Under Armour is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 4,615 in Under Armour on August 26, 2024 and sell it today you would earn a total of 415.00 from holding Under Armour or generate 8.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 90.91% |
| Values | Daily Returns |
Ford Motor vs. Under Armour
Performance |
| Timeline |
| Ford Motor |
| Under Armour |
Ford and Under Armour Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Under Armour
The main advantage of trading using opposite Ford and Under Armour positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Under Armour 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 Under Armour will offset losses from the drop in Under Armour's long position.The idea behind Ford Motor and Under Armour 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.| Under Armour vs. Livetech da Bahia | Under Armour vs. BIONTECH SE DRN | Under Armour vs. Ameriprise Financial | Under Armour vs. Align Technology |
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 Valuation module to check real value of public entities based on technical and fundamental data.
Other Complementary Tools
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| CEOs Directory Screen CEOs from public companies around the world | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume |