Correlation Between Ford and Wag Group

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

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

Diversification Opportunities for Ford and Wag Group

-0.5

Correlation Coefficient

Ford  Wag Group

Very good diversification

The 3 months correlation between Ford and Wag is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Wag Group Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wag Group 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 Wag Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wag Group has no effect on the direction of Ford i.e., Ford and Wag Group go up and down completely randomly.

Pair Corralation between Ford and Wag Group

Taking into account the 90-day investment horizon Ford is expected to generate 18.8 times less return on investment than Wag Group. But when comparing it to its historical volatility, Ford Motor is 9.34 times less risky than Wag Group. It trades about 0.04 of its potential returns per unit of risk. Wag Group Co is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  1.75  in Wag Group Co on December 22, 2024 and sell it today you would earn a total of  0.18  from holding Wag Group Co or generate 10.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Ford Motor  vs.  Wag Group Co

Ford Motor

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ford Motor are ranked lower than 3 (%) 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.

Wag Group

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Wag Group Co are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Wag Group showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ford and Wag Group

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

The idea behind Ford Motor and Wag Group Co 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.