Correlation Between Ford and My Humble

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

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

Diversification Opportunities for Ford and My Humble

-0.08

Correlation Coefficient

Ford  My Humble

Good diversification

The 3 months correlation between Ford and 2739 is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and My Humble House in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on My Humble House 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 My Humble. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of My Humble House has no effect on the direction of Ford i.e., Ford and My Humble go up and down completely randomly.

Pair Corralation between Ford and My Humble

Taking into account the 90-day investment horizon Ford Motor is expected to generate 0.8 times more return on investment than My Humble. However, Ford Motor is 1.25 times less risky than My Humble. It trades about 0.01 of its potential returns per unit of risk. My Humble House is currently generating about 0.0 per unit of risk. If you would invest  1,000.00  in Ford Motor on September 27, 2024 and sell it today you would earn a total of  2.00  from holding Ford Motor or generate 0.2% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	97.77%
Values	Daily Returns

Ford Motor  vs.  My Humble House

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.

My Humble House

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days My Humble House has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Ford and My Humble

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

The idea behind Ford Motor and My Humble House 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.