Correlation Between Ford and Guidemark World

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Can any of the company-specific risk be diversified away by investing in both Ford and Guidemark World 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 Guidemark World into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Guidemark World Ex Us, you can compare the effects of market volatilities on Ford and Guidemark World 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 Guidemark World. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Guidemark World.

Diversification Opportunities for Ford and Guidemark World

0.01
  Correlation Coefficient

Significant diversification

The 3 months correlation between Ford and Guidemark is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Guidemark World Ex Us in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guidemark World Ex 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 Guidemark World. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guidemark World Ex has no effect on the direction of Ford i.e., Ford and Guidemark World go up and down completely randomly.

Pair Corralation between Ford and Guidemark World

Taking into account the 90-day investment horizon Ford Motor is expected to generate 2.66 times more return on investment than Guidemark World. However, Ford is 2.66 times more volatile than Guidemark World Ex Us. It trades about -0.02 of its potential returns per unit of risk. Guidemark World Ex Us is currently generating about -0.2 per unit of risk. If you would invest  1,042  in Ford Motor on September 28, 2024 and sell it today you would lose (38.00) from holding Ford Motor or give up 3.65% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Ford Motor  vs.  Guidemark World Ex Us

 Performance 
JavaScript chart by amCharts 3.21.15OctNovDec -50510
JavaScript chart by amCharts 3.21.15F GMWEX
       Timeline  
Ford Motor 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Ford Motor has generated negative risk-adjusted returns adding no value to investors with long positions. 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.
JavaScript chart by amCharts 3.21.15NovDecDec1010.51111.5
Guidemark World Ex 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Guidemark World Ex Us has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.
JavaScript chart by amCharts 3.21.15NovDecDec10.510.610.710.810.91111.111.211.311.4

Ford and Guidemark World Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-3.18-2.38-1.58-0.78-0.01330.751.542.333.123.91 0.10.20.30.40.50.60.7
JavaScript chart by amCharts 3.21.15F GMWEX
       Returns  

Pair Trading with Ford and Guidemark World

The main advantage of trading using opposite Ford and Guidemark World positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Guidemark World 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 Guidemark World will offset losses from the drop in Guidemark World's long position.
The idea behind Ford Motor and Guidemark World Ex Us 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.

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