Correlation Between Ford and Rm Greyhawk

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

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

Diversification Opportunities for Ford and Rm Greyhawk

0.21

Correlation Coefficient

Ford  Rm Greyhawk

Modest diversification

The 3 months correlation between Ford and HAWKX is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Rm Greyhawk Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rm Greyhawk Fund 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 Rm Greyhawk. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rm Greyhawk Fund has no effect on the direction of Ford i.e., Ford and Rm Greyhawk go up and down completely randomly.

Pair Corralation between Ford and Rm Greyhawk

Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the Rm Greyhawk. In addition to that, Ford is 39.57 times more volatile than Rm Greyhawk Fund. It trades about -0.01 of its total potential returns per unit of risk. Rm Greyhawk Fund is currently generating about 0.17 per unit of volatility. If you would invest  2,494  in Rm Greyhawk Fund on September 16, 2024 and sell it today you would earn a total of  14.00  from holding Rm Greyhawk Fund or generate 0.56% 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.  Rm Greyhawk Fund

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 nearly stable technical and fundamental indicators, Ford is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Rm Greyhawk Fund

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Rm Greyhawk Fund are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward-looking signals, Rm Greyhawk is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Ford and Rm Greyhawk

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

The idea behind Ford Motor and Rm Greyhawk Fund 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 Commodity Directory module to find actively traded commodities issued by global exchanges.