Correlation Between Ford and SG Fleet

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

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

Diversification Opportunities for Ford and SG Fleet

-0.34

Correlation Coefficient

Ford  SG Fleet

Very good diversification

The 3 months correlation between Ford and SGF is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and SG Fleet Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SG Fleet 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 SG Fleet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SG Fleet Group has no effect on the direction of Ford i.e., Ford and SG Fleet go up and down completely randomly.

Pair Corralation between Ford and SG Fleet

Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the SG Fleet. In addition to that, Ford is 1.12 times more volatile than SG Fleet Group. It trades about -0.05 of its total potential returns per unit of risk. SG Fleet Group is currently generating about 0.04 per unit of volatility. If you would invest  308.00  in SG Fleet Group on September 29, 2024 and sell it today you would earn a total of  32.00  from holding SG Fleet Group or generate 10.39% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	97.67%
Values	Daily Returns

Ford Motor  vs.  SG Fleet Group

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 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.

SG Fleet Group

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in SG Fleet Group are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical and fundamental indicators, SG Fleet unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ford and SG Fleet

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

The idea behind Ford Motor and SG Fleet Group 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.