Correlation Between Ford and 00206RGM8

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Can any of the company-specific risk be diversified away by investing in both Ford and 00206RGM8 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 00206RGM8 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and ATT INC 6375, you can compare the effects of market volatilities on Ford and 00206RGM8 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 00206RGM8. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and 00206RGM8.

Diversification Opportunities for Ford and 00206RGM8

0.03
  Correlation Coefficient

Significant diversification

The 3 months correlation between Ford and 00206RGM8 is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and ATT INC 6375 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ATT INC 6375 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 00206RGM8. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ATT INC 6375 has no effect on the direction of Ford i.e., Ford and 00206RGM8 go up and down completely randomly.

Pair Corralation between Ford and 00206RGM8

Taking into account the 90-day investment horizon Ford Motor is expected to generate 1.98 times more return on investment than 00206RGM8. However, Ford is 1.98 times more volatile than ATT INC 6375. It trades about 0.25 of its potential returns per unit of risk. ATT INC 6375 is currently generating about 0.22 per unit of risk. If you would invest  1,008  in Ford Motor on September 2, 2024 and sell it today you would earn a total of  105.00  from holding Ford Motor or generate 10.42% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy23.81%
ValuesDaily Returns

Ford Motor  vs.  ATT INC 6375

 Performance 
       Timeline  
Ford Motor 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Ford Motor are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, Ford is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.
ATT INC 6375 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days ATT INC 6375 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 00206RGM8 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Ford and 00206RGM8 Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Ford and 00206RGM8

The main advantage of trading using opposite Ford and 00206RGM8 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, 00206RGM8 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 00206RGM8 will offset losses from the drop in 00206RGM8's long position.
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The idea behind Ford Motor and ATT INC 6375 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.
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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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.

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