Correlation Between Ford and Invesco Physical

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

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

Diversification Opportunities for Ford and Invesco Physical

0.05

Correlation Coefficient

Ford  Invesco Physical

Significant diversification

The 3 months correlation between Ford and Invesco is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Invesco Physical Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Physical Gold 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 Invesco Physical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Physical Gold has no effect on the direction of Ford i.e., Ford and Invesco Physical go up and down completely randomly.

Pair Corralation between Ford and Invesco Physical

Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the Invesco Physical. In addition to that, Ford is 1.52 times more volatile than Invesco Physical Gold. It trades about -0.22 of its total potential returns per unit of risk. Invesco Physical Gold is currently generating about -0.16 per unit of volatility. If you would invest  25,710  in Invesco Physical Gold on October 9, 2024 and sell it today you would lose (630.00) from holding Invesco Physical Gold or give up 2.45% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	78.95%
Values	Daily Returns

Ford Motor  vs.  Invesco Physical Gold

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.

Invesco Physical Gold

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Invesco Physical Gold has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Invesco Physical is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Ford and Invesco Physical

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

The idea behind Ford Motor and Invesco Physical Gold 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 CEOs Directory module to screen CEOs from public companies around the world.