Correlation Between Ford and Aberdeen Global

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

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

Diversification Opportunities for Ford and Aberdeen Global

-0.12

Correlation Coefficient

Ford  Aberdeen Global

Good diversification

The 3 months correlation between Ford and Aberdeen is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Aberdeen Global Premier in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aberdeen Global Premier 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 Aberdeen Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aberdeen Global Premier has no effect on the direction of Ford i.e., Ford and Aberdeen Global go up and down completely randomly.

Pair Corralation between Ford and Aberdeen Global

Taking into account the 90-day investment horizon Ford is expected to generate 3.24 times less return on investment than Aberdeen Global. In addition to that, Ford is 1.62 times more volatile than Aberdeen Global Premier. It trades about 0.01 of its total potential returns per unit of risk. Aberdeen Global Premier is currently generating about 0.05 per unit of volatility. If you would invest  332.00  in Aberdeen Global Premier on September 3, 2024 and sell it today you would earn a total of  109.00  from holding Aberdeen Global Premier or generate 32.83% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Ford Motor  vs.  Aberdeen Global Premier

Ford Motor

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ford Motor are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, Ford is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Aberdeen Global Premier

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Aberdeen Global Premier are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. Even with relatively invariable basic indicators, Aberdeen Global is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Ford and Aberdeen Global

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

The idea behind Ford Motor and Aberdeen Global Premier 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..