Correlation Between Ford and Grupo Aeroportuario

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

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

Diversification Opportunities for Ford and Grupo Aeroportuario

-0.43

Correlation Coefficient

Ford  Grupo Aeroportuario

Very good diversification

The 3 months correlation between Ford and Grupo is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Grupo Aeroportuario del in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grupo Aeroportuario del 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 Grupo Aeroportuario. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grupo Aeroportuario del has no effect on the direction of Ford i.e., Ford and Grupo Aeroportuario go up and down completely randomly.

Pair Corralation between Ford and Grupo Aeroportuario

Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the Grupo Aeroportuario. But the stock apears to be less risky and, when comparing its historical volatility, Ford Motor is 3.74 times less risky than Grupo Aeroportuario. The stock trades about -0.02 of its potential returns per unit of risk. The Grupo Aeroportuario del is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  384.00  in Grupo Aeroportuario del on December 4, 2024 and sell it today you would earn a total of  1,406  from holding Grupo Aeroportuario del or generate 366.15% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.79%
Values	Daily Returns

Ford Motor  vs.  Grupo Aeroportuario del

Ford Motor

Risk-Adjusted Performance

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.

Grupo Aeroportuario del

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Grupo Aeroportuario del are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Grupo Aeroportuario is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Ford and Grupo Aeroportuario

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

The idea behind Ford Motor and Grupo Aeroportuario del 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.