Correlation Between Ford and Globalink Investment

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

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

Diversification Opportunities for Ford and Globalink Investment

0.12

Correlation Coefficient

Ford  Globalink Investment

Average diversification

The 3 months correlation between Ford and Globalink is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Globalink Investment Warrants in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Globalink Investment 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 Globalink Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Globalink Investment has no effect on the direction of Ford i.e., Ford and Globalink Investment go up and down completely randomly.

Pair Corralation between Ford and Globalink Investment

Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the Globalink Investment. But the stock apears to be less risky and, when comparing its historical volatility, Ford Motor is 106.17 times less risky than Globalink Investment. The stock trades about -0.27 of its potential returns per unit of risk. The Globalink Investment Warrants is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest  2.00  in Globalink Investment Warrants on October 10, 2024 and sell it today you would lose (1.67) from holding Globalink Investment Warrants or give up 83.5% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	19.05%
Values	Daily Returns

Ford Motor  vs.  Globalink Investment Warrants

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 abnormal 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.

Globalink Investment

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days Globalink Investment Warrants has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly abnormal forward indicators, Globalink Investment showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ford and Globalink Investment

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

The idea behind Ford Motor and Globalink Investment Warrants 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 Stocks Directory module to find actively traded stocks across global markets.