Correlation Between Ford and Construction And

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

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

Diversification Opportunities for Ford and Construction And

-0.58

Correlation Coefficient

Ford  Construction And

Excellent diversification

The 3 months correlation between Ford and Construction is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Construction And Housing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Construction And Housing 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 Construction And. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Construction And Housing has no effect on the direction of Ford i.e., Ford and Construction And go up and down completely randomly.

Pair Corralation between Ford and Construction And

Given the investment horizon of 90 days Ford Motor is expected to under-perform the Construction And. But the preferred stock apears to be less risky and, when comparing its historical volatility, Ford Motor is 1.55 times less risky than Construction And. The preferred stock trades about -0.11 of its potential returns per unit of risk. The Construction And Housing is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  12,138  in Construction And Housing on September 2, 2024 and sell it today you would earn a total of  1,618  from holding Construction And Housing or generate 13.33% return on investment over 90 days.

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

Ford Motor  vs.  Construction And Housing

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. In spite of rather sound basic indicators, Ford is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Construction And Housing

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Construction And Housing are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Construction And may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Ford and Construction And

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

The idea behind Ford Motor and Construction And Housing 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.