Correlation Between Ford and Grupo Televisa

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

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

Diversification Opportunities for Ford and Grupo Televisa

0.11

Correlation Coefficient

Ford  Grupo Televisa

Average diversification

The 3 months correlation between Ford and Grupo is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Grupo Televisa SAB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grupo Televisa SAB 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 Grupo Televisa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grupo Televisa SAB has no effect on the direction of Ford i.e., Ford and Grupo Televisa go up and down completely randomly.

Pair Corralation between Ford and Grupo Televisa

Taking into account the 90-day investment horizon Ford is expected to generate 2.64 times less return on investment than Grupo Televisa. But when comparing it to its historical volatility, Ford Motor is 1.25 times less risky than Grupo Televisa. It trades about 0.08 of its potential returns per unit of risk. Grupo Televisa SAB is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  55.00  in Grupo Televisa SAB on January 24, 2024 and sell it today you would earn a total of  10.00  from holding Grupo Televisa SAB or generate 18.18% 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.  Grupo Televisa SAB

Ford Motor

Risk-Adjusted Performance

11 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Ford Motor are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating technical and fundamental indicators, Ford reported solid returns over the last few months and may actually be approaching a breakup point.

Grupo Televisa SAB

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Grupo Televisa SAB are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical and fundamental indicators, Grupo Televisa reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ford and Grupo Televisa

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

The idea behind Ford Motor and Grupo Televisa SAB 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.