Correlation Between Ford and Lecron Energy

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

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

Diversification Opportunities for Ford and Lecron Energy

0.02

Correlation Coefficient

Ford  Lecron Energy

Significant diversification

The 3 months correlation between Ford and Lecron is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Lecron Energy Saving in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lecron Energy Saving 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 Lecron Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lecron Energy Saving has no effect on the direction of Ford i.e., Ford and Lecron Energy go up and down completely randomly.

Pair Corralation between Ford and Lecron Energy

Taking into account the 90-day investment horizon Ford Motor is expected to generate 0.76 times more return on investment than Lecron Energy. However, Ford Motor is 1.31 times less risky than Lecron Energy. It trades about 0.05 of its potential returns per unit of risk. Lecron Energy Saving is currently generating about 0.02 per unit of risk. If you would invest  959.00  in Ford Motor on December 21, 2024 and sell it today you would earn a total of  42.00  from holding Ford Motor or generate 4.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	96.61%
Values	Daily Returns

Ford Motor  vs.  Lecron Energy Saving

Ford Motor

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ford Motor are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. 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.

Lecron Energy Saving

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Lecron Energy Saving are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Lecron Energy 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 Lecron Energy

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

The idea behind Ford Motor and Lecron Energy Saving 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.