Correlation Between Ford and Universal Logistics
Can any of the company-specific risk be diversified away by investing in both Ford and Universal Logistics 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 Universal Logistics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Universal Logistics Holdings, you can compare the effects of market volatilities on Ford and Universal Logistics 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 Universal Logistics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Universal Logistics.
Diversification Opportunities for Ford and Universal Logistics
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Ford and Universal is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Universal Logistics Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal Logistics 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 Universal Logistics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Universal Logistics has no effect on the direction of Ford i.e., Ford and Universal Logistics go up and down completely randomly.
Pair Corralation between Ford and Universal Logistics
Taking into account the 90-day investment horizon Ford Motor is expected to generate 0.52 times more return on investment than Universal Logistics. However, Ford Motor is 1.92 times less risky than Universal Logistics. It trades about 0.06 of its potential returns per unit of risk. Universal Logistics Holdings is currently generating about -0.2 per unit of risk. If you would invest 971.00 in Ford Motor on December 27, 2024 and sell it today you would earn a total of 58.00 from holding Ford Motor or generate 5.97% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Ford Motor vs. Universal Logistics Holdings
Performance |
Timeline |
Ford Motor |
Universal Logistics |
Ford and Universal Logistics Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Ford and Universal Logistics
The main advantage of trading using opposite Ford and Universal Logistics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Universal Logistics 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 Universal Logistics will offset losses from the drop in Universal Logistics' long position.The idea behind Ford Motor and Universal Logistics Holdings 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.Universal Logistics vs. Covenant Logistics Group, | Universal Logistics vs. Marten Transport | Universal Logistics vs. Midland States Bancorp | Universal Logistics vs. PC Connection |
Check out your portfolio center.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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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