Question 1: Is the average return for Ford Motor stock higher after a drop?
Answer:
Consider two situations,
Case 1: Ford Motor stock drops by -5% or more in a week
Case 2: Ford Motor stock rises by 5% or more in a week
Is the average return for Ford Motor stock higher over the subsequent month after Case 1 or Case 2?
F stock fares better after Case 2, with an average return of 1% over the next month (21 trading days) under Case 1 (where the stock has just suffered a 5% loss over the previous week), versus, an average return of 1.5% for Case 2.
In comparison, the S&P 500 has an average return of 3.1% over the next 21 trading days under Case 1, and an average return of just 0.5% for Case 2 as detailed in our dashboard that details the average return for the S&P 500 after a fall or rise.
Try the Trefis machine learning engine above to see for yourself how Ford Motor stock is likely to behave after any specific gain or loss over a period.
Question 2: Does patience pay?
Answer:
If you buy and hold Ford Motor stock, the expectation is over time the near term fluctuations will cancel out, and the long-term positive trend will favor you - at least if the company is otherwise strong.
Overall, according to data and Trefis machine learning engine's calculations, patience absolutely pays for most stocks!
For F stock, the returns over the next N days after a -5% change over the last 5 trading days is detailed in the table below, along with the returns for the S&P500:
Next N DaysF Average ReturnS&P 500 Average Return1 day0%0.5%5 days0.5%1.1%10 days-0.1%0.9%21 days1%3.1%63 days5%5.2%126 days10.8%7.4%252 days17.6%15.6%
You can try the engine to see what this table looks like for Ford Motor after a larger loss over the last week, month, or quarter.
Question 3: What about the average return after a rise if you wait for a while?
Answer:
The average return after a rise is understandably lower than a fall as detailed in the previous question. Interestingly, though, if a stock has gained over the last few days, you would do better to avoid short-term bets for most stocks.
F's returns over the next N days after a 5% change over the last 5 trading days is detailed in the table below, along with the returns for the S&P500:
Next N DaysF Average ReturnS&P 500 Average Return1 day0.1%-0.3%5 days-0.1%-0.3%10 days1.5%0.1%21 days1.5%0.5%63 days7.1%3.0%126 days12.4%6.6%252 days14.2%11.7%
It's pretty powerful to test the trend for yourself for Ford Motor stock by changing the inputs in the charts above.