Correlation Between Ford and Pacteo Actions

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

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

Diversification Opportunities for Ford and Pacteo Actions

-0.36

Correlation Coefficient

Ford  Pacteo Actions

Very good diversification

The 3 months correlation between Ford and Pacteo is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Pacteo Actions Europe in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacteo Actions Europe 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 Pacteo Actions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacteo Actions Europe has no effect on the direction of Ford i.e., Ford and Pacteo Actions go up and down completely randomly.

Pair Corralation between Ford and Pacteo Actions

Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the Pacteo Actions. In addition to that, Ford is 2.52 times more volatile than Pacteo Actions Europe. It trades about -0.31 of its total potential returns per unit of risk. Pacteo Actions Europe is currently generating about -0.06 per unit of volatility. If you would invest  1,648  in Pacteo Actions Europe on October 1, 2024 and sell it today you would lose (10.00) from holding Pacteo Actions Europe or give up 0.61% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	80.95%
Values	Daily Returns

Ford Motor  vs.  Pacteo Actions Europe

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.

Pacteo Actions Europe

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pacteo Actions Europe has generated negative risk-adjusted returns adding no value to fund investors. Despite somewhat strong basic indicators, Pacteo Actions 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 Pacteo Actions

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

The idea behind Ford Motor and Pacteo Actions Europe 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.