Correlation Between Ford and Greenpower

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Can any of the company-specific risk be diversified away by investing in both Ford and Greenpower 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 Greenpower into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Greenpower Motor, you can compare the effects of market volatilities on Ford and Greenpower 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 Greenpower. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Greenpower.

Diversification Opportunities for Ford and Greenpower

0.89
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Ford and Greenpower is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Greenpower Motor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Greenpower Motor 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 Greenpower. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Greenpower Motor has no effect on the direction of Ford i.e., Ford and Greenpower go up and down completely randomly.

Pair Corralation between Ford and Greenpower

Taking into account the 90-day investment horizon Ford Motor is expected to generate 0.76 times more return on investment than Greenpower. However, Ford Motor is 1.31 times less risky than Greenpower. It trades about -0.26 of its potential returns per unit of risk. Greenpower Motor is currently generating about -0.35 per unit of risk. If you would invest  1,346  in Ford Motor on April 5, 2022 and sell it today you would lose (214.00)  from holding Ford Motor or give up 15.9% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Ford Motor  vs.  Greenpower Motor

 Performance (%) 
      Timeline 
Ford Motor 
Ford Performance
0 of 100
Over the last 90 days Ford Motor has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in August 2022. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Structure and Payout Changes

Forward Annual Dividend Yield
0.0353
Payout Ratio
0.23
Last Split Factor
1748175:10
Forward Annual Dividend Rate
0.4
Dividend Date
2022-06-01
Ex Dividend Date
2022-04-25
Last Split Date
2000-08-03

Ford Price Channel

Greenpower Motor 
Greenpower Performance
0 of 100
Over the last 90 days Greenpower Motor has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in August 2022. The recent disarray may also be a sign of long period up-swing for the firm insiders.

Structure and Payout Changes

Last Split Factor
1:7
Dividend Date
2020-08-28
Last Split Date
2020-08-28

Greenpower Price Channel

Ford and Greenpower Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Ford and Greenpower

The main advantage of trading using opposite Ford and Greenpower positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Greenpower 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 Greenpower will offset losses from the drop in Greenpower's long position.
The idea behind Ford Motor and Greenpower Motor 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.

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