Correlation Between Ford and Western Asset
Can any of the company-specific risk be diversified away by investing in both Ford and Western Asset 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 Western Asset into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Western Asset Claymore, you can compare the effects of market volatilities on Ford and Western Asset 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 Western Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Western Asset.
Diversification Opportunities for Ford and Western Asset
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ford and Western is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Western Asset Claymore in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Asset Claymore 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 Western Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Asset Claymore has no effect on the direction of Ford i.e., Ford and Western Asset go up and down completely randomly.
Pair Corralation between Ford and Western Asset
Taking into account the 90-day investment horizon Ford is expected to generate 1.41 times less return on investment than Western Asset. In addition to that, Ford is 4.13 times more volatile than Western Asset Claymore. It trades about 0.01 of its total potential returns per unit of risk. Western Asset Claymore is currently generating about 0.05 per unit of volatility. If you would invest 777.00 in Western Asset Claymore on August 27, 2024 and sell it today you would earn a total of 78.00 from holding Western Asset Claymore or generate 10.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ford Motor vs. Western Asset Claymore
Performance |
| Timeline |
| Ford Motor |
| Western Asset Claymore |
Ford and Western Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Western Asset
The main advantage of trading using opposite Ford and Western Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Western Asset 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 Western Asset will offset losses from the drop in Western Asset's long position.The idea behind Ford Motor and Western Asset Claymore 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.| Western Asset vs. The Gabelli Equity | Western Asset vs. Eaton Vance National | Western Asset vs. Structured Products Corp | Western Asset vs. Aberdeen Standard Global |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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