Correlation Between Ford and Blackrock Gnma

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

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

Diversification Opportunities for Ford and Blackrock Gnma

0.21

Correlation Coefficient

Ford  Blackrock Gnma

Modest diversification

The 3 months correlation between Ford and BlackRock is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Blackrock Gnma Inv in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackrock Gnma Inv 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 Blackrock Gnma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blackrock Gnma Inv has no effect on the direction of Ford i.e., Ford and Blackrock Gnma go up and down completely randomly.

Pair Corralation between Ford and Blackrock Gnma

Taking into account the 90-day investment horizon Ford Motor is expected to generate 6.5 times more return on investment than Blackrock Gnma. However, Ford is 6.5 times more volatile than Blackrock Gnma Inv. It trades about 0.04 of its potential returns per unit of risk. Blackrock Gnma Inv is currently generating about 0.1 per unit of risk. If you would invest  957.00  in Ford Motor on December 28, 2024 and sell it today you would earn a total of  33.00  from holding Ford Motor or generate 3.45% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.36%
Values	Daily Returns

Ford Motor  vs.  Blackrock Gnma Inv

Ford Motor

Risk-Adjusted Performance

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.

Blackrock Gnma Inv

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Blackrock Gnma Inv are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Blackrock Gnma is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Ford and Blackrock Gnma

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

The idea behind Ford Motor and Blackrock Gnma Inv 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.

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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.