Correlation Between Ford and Argo Group

Can any of the company-specific risk be diversified away by investing in both Ford and Argo Group 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 Argo Group into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Ford Motor and Argo Group 65, you can compare the effects of market volatilities on Ford and Argo Group 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 Argo Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Argo Group.

Diversification Opportunities for Ford and Argo Group

-0.27

Correlation Coefficient

Ford  Argo Group

Very good diversification

The 3 months correlation between Ford and Argo is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Argo Group 65 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Argo Group 65 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 Argo Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Argo Group 65 has no effect on the direction of Ford i.e., Ford and Argo Group go up and down completely randomly.

Pair Corralation between Ford and Argo Group

Taking into account the 90-day investment horizon Ford is expected to generate 1.01 times less return on investment than Argo Group. In addition to that, Ford is 2.66 times more volatile than Argo Group 65. It trades about 0.01 of its total potential returns per unit of risk. Argo Group 65 is currently generating about 0.04 per unit of volatility. If you would invest  1,979  in Argo Group 65 on August 31, 2024 and sell it today you would earn a total of  246.00  from holding Argo Group 65 or generate 12.43% 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.  Argo Group 65

Ford Motor

Risk-Adjusted Performance

2 of 100

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.

Argo Group 65

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Argo Group 65 are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Argo Group is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Ford and Argo Group

The main advantage of trading using opposite Ford and Argo Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Argo Group 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 Argo Group will offset losses from the drop in Argo Group's long position.

The idea behind Ford Motor and Argo Group 65 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.