Correlation Between Ford and GLATFELTER

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

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

Diversification Opportunities for Ford and GLATFELTER

-0.03

Correlation Coefficient

Ford  GLATFELTER

Good diversification

The 3 months correlation between Ford and GLATFELTER is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and GLATFELTER in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GLATFELTER 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 GLATFELTER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GLATFELTER has no effect on the direction of Ford i.e., Ford and GLATFELTER go up and down completely randomly.

Pair Corralation between Ford and GLATFELTER

Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the GLATFELTER. But the stock apears to be less risky and, when comparing its historical volatility, Ford Motor is 1.66 times less risky than GLATFELTER. The stock trades about -0.23 of its potential returns per unit of risk. The GLATFELTER is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  1,736  in GLATFELTER on September 22, 2024 and sell it today you would lose (16.00) from holding GLATFELTER or give up 0.92% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Ford Motor  vs.  GLATFELTER

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 latest unfluctuating performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

GLATFELTER

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GLATFELTER has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Ford and GLATFELTER

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

The idea behind Ford Motor and GLATFELTER 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.

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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.