Correlation Between Ford and God Bless
Can any of the company-specific risk be diversified away by investing in both Ford and God Bless 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 God Bless into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and God Bless America, you can compare the effects of market volatilities on Ford and God Bless 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 God Bless. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and God Bless.
Diversification Opportunities for Ford and God Bless
Poor diversification
The 3 months correlation between Ford and God is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and God Bless America in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on God Bless America 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 God Bless. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of God Bless America has no effect on the direction of Ford i.e., Ford and God Bless go up and down completely randomly.
Pair Corralation between Ford and God Bless
Taking into account the 90-day investment horizon Ford is expected to generate 3.45 times less return on investment than God Bless. In addition to that, Ford is 2.42 times more volatile than God Bless America. It trades about 0.03 of its total potential returns per unit of risk. God Bless America is currently generating about 0.22 per unit of volatility. If you would invest 3,695 in God Bless America on September 8, 2024 and sell it today you would earn a total of 334.00 from holding God Bless America or generate 9.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ford Motor vs. God Bless America
Performance |
| Timeline |
| Ford Motor |
| God Bless America |
Ford and God Bless Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and God Bless
The main advantage of trading using opposite Ford and God Bless positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, God Bless 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 God Bless will offset losses from the drop in God Bless' long position.The idea behind Ford Motor and God Bless America 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.| God Bless vs. Point Bridge GOP | God Bless vs. EA Series Trust | God Bless vs. EA Series Trust | God Bless vs. ETF Opportunities Trust |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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