Correlation Between Ford and Pareto Nordic

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

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

Diversification Opportunities for Ford and Pareto Nordic

-0.18

Correlation Coefficient

Ford  Pareto Nordic

Good diversification

The 3 months correlation between Ford and Pareto is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Pareto Nordic Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pareto Nordic Equity 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 Pareto Nordic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pareto Nordic Equity has no effect on the direction of Ford i.e., Ford and Pareto Nordic go up and down completely randomly.

Pair Corralation between Ford and Pareto Nordic

Taking into account the 90-day investment horizon Ford Motor is expected to generate 2.37 times more return on investment than Pareto Nordic. However, Ford is 2.37 times more volatile than Pareto Nordic Equity. It trades about 0.06 of its potential returns per unit of risk. Pareto Nordic Equity is currently generating about 0.11 per unit of risk. If you would invest  971.00  in Ford Motor on December 27, 2024 and sell it today you would earn a total of  58.00  from holding Ford Motor or generate 5.97% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.77%
Values	Daily Returns

Ford Motor  vs.  Pareto Nordic Equity

Ford Motor

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ford Motor are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating technical and fundamental indicators, Ford may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pareto Nordic Equity

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Pareto Nordic Equity are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. Despite nearly stable basic indicators, Pareto Nordic is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Ford and Pareto Nordic

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

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