Correlation Between Garrett Motion and Ford
Can any of the company-specific risk be diversified away by investing in both Garrett Motion and Ford 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 Garrett Motion and Ford into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Garrett Motion and Ford Motor, you can compare the effects of market volatilities on Garrett Motion and Ford 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 Garrett Motion with a short position of Ford. Check out your portfolio center. Please also check ongoing floating volatility patterns of Garrett Motion and Ford.
Diversification Opportunities for Garrett Motion and Ford
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Garrett and Ford is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Garrett Motion and Ford Motor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ford Motor and Garrett Motion 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 Garrett Motion are associated (or correlated) with Ford. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ford Motor has no effect on the direction of Garrett Motion i.e., Garrett Motion and Ford go up and down completely randomly.
Pair Corralation between Garrett Motion and Ford
Considering the 90-day investment horizon Garrett Motion is expected to generate 0.93 times more return on investment than Ford. However, Garrett Motion is 1.08 times less risky than Ford. It trades about 0.03 of its potential returns per unit of risk. Ford Motor is currently generating about 0.02 per unit of risk. If you would invest 785.00 in Garrett Motion on September 13, 2024 and sell it today you would earn a total of 144.50 from holding Garrett Motion or generate 18.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Garrett Motion vs. Ford Motor
Performance |
| Timeline |
| Garrett Motion |
| Ford Motor |
Garrett Motion and Ford Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Garrett Motion and Ford
The main advantage of trading using opposite Garrett Motion and Ford positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Garrett Motion position performs unexpectedly, Ford 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 Ford will offset losses from the drop in Ford's long position.| Garrett Motion vs. Resideo Technologies | Garrett Motion vs. AdvanSix | Garrett Motion vs. GrafTech International | Garrett Motion vs. Innoviva |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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