Correlation Between Ford and DIAGEO
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By analyzing existing cross correlation between Ford Motor and DIAGEO CAPITAL PLC, you can compare the effects of market volatilities on Ford and DIAGEO 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 DIAGEO. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and DIAGEO.
Diversification Opportunities for Ford and DIAGEO
Excellent diversification
The 3 months correlation between Ford and DIAGEO is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and DIAGEO CAPITAL PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DIAGEO CAPITAL PLC 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 DIAGEO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DIAGEO CAPITAL PLC has no effect on the direction of Ford i.e., Ford and DIAGEO go up and down completely randomly.
Pair Corralation between Ford and DIAGEO
Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the DIAGEO. But the stock apears to be less risky and, when comparing its historical volatility, Ford Motor is 38.19 times less risky than DIAGEO. The stock trades about 0.0 of its potential returns per unit of risk. The DIAGEO CAPITAL PLC is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 8,142 in DIAGEO CAPITAL PLC on August 31, 2024 and sell it today you would earn a total of 169.00 from holding DIAGEO CAPITAL PLC or generate 2.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 74.87% |
| Values | Daily Returns |
Ford Motor vs. DIAGEO CAPITAL PLC
Performance |
| Timeline |
| Ford Motor |
| DIAGEO CAPITAL PLC |
Ford and DIAGEO Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and DIAGEO
The main advantage of trading using opposite Ford and DIAGEO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, DIAGEO 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 DIAGEO will offset losses from the drop in DIAGEO's long position.The idea behind Ford Motor and DIAGEO CAPITAL PLC 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.| DIAGEO vs. CVW CleanTech | DIAGEO vs. Ironveld Plc | DIAGEO vs. Capital Clean Energy | DIAGEO vs. Sanyo Special Steel |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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