Correlation Between Ford and GWILLI FOOD

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

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

Diversification Opportunities for Ford and GWILLI FOOD

-0.69

Correlation Coefficient

Ford  GWILLI FOOD

Excellent diversification

The 3 months correlation between Ford and GWILLI is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and GWILLI FOOD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GWILLI FOOD 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 GWILLI FOOD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GWILLI FOOD has no effect on the direction of Ford i.e., Ford and GWILLI FOOD go up and down completely randomly.

Pair Corralation between Ford and GWILLI FOOD

Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the GWILLI FOOD. But the stock apears to be less risky and, when comparing its historical volatility, Ford Motor is 1.29 times less risky than GWILLI FOOD. The stock trades about -0.01 of its potential returns per unit of risk. The GWILLI FOOD is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  1,166  in GWILLI FOOD on October 24, 2024 and sell it today you would earn a total of  374.00  from holding GWILLI FOOD or generate 32.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.6%
Values	Daily Returns

Ford Motor  vs.  GWILLI FOOD

Ford Motor

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ford Motor has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

GWILLI FOOD

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in GWILLI FOOD are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, GWILLI FOOD exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ford and GWILLI FOOD

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

The idea behind Ford Motor and GWILLI FOOD 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.