Correlation Between Ford and Gartner
Can any of the company-specific risk be diversified away by investing in both Ford and Gartner 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 Gartner into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Gartner, you can compare the effects of market volatilities on Ford and Gartner 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 Gartner. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Gartner.
Diversification Opportunities for Ford and Gartner
Modest diversification
The 3 months correlation between Ford and Gartner is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Gartner in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gartner 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 Gartner. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gartner has no effect on the direction of Ford i.e., Ford and Gartner go up and down completely randomly.
Pair Corralation between Ford and Gartner
Taking into account the 90-day investment horizon Ford Motor is expected to generate 1.92 times more return on investment than Gartner. However, Ford is 1.92 times more volatile than Gartner. It trades about 0.09 of its potential returns per unit of risk. Gartner is currently generating about -0.19 per unit of risk. If you would invest 1,244 in Ford Motor on January 26, 2024 and sell it today you would earn a total of 51.00 from holding Ford Motor or generate 4.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ford Motor vs. Gartner
Performance |
| Timeline |
| Ford Motor |
| Gartner |
Ford and Gartner Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Gartner
The main advantage of trading using opposite Ford and Gartner positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Gartner 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 Gartner will offset losses from the drop in Gartner's long position.| Ford vs. Hycroft Mining Holding | Ford vs. Imperial Petroleum | Ford vs. Exela Technologies | Ford vs. Camber Energy |
| Gartner vs. EPAM Systems | Gartner vs. Infosys Ltd ADR | Gartner vs. Cognizant Technology Solutions | Gartner vs. FiscalNote Holdings |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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