Correlation Between Ford and CTP NV

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

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

Diversification Opportunities for Ford and CTP NV

-0.31

Correlation Coefficient

Ford  CTP NV

Very good diversification

The 3 months correlation between Ford and CTP is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and CTP NV EO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CTP NV EO 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 CTP NV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CTP NV EO has no effect on the direction of Ford i.e., Ford and CTP NV go up and down completely randomly.

Pair Corralation between Ford and CTP NV

Taking into account the 90-day investment horizon Ford is expected to generate 5.7 times less return on investment than CTP NV. In addition to that, Ford is 1.28 times more volatile than CTP NV EO. It trades about 0.01 of its total potential returns per unit of risk. CTP NV EO is currently generating about 0.11 per unit of volatility. If you would invest  1,496  in CTP NV EO on December 16, 2024 and sell it today you would earn a total of  150.00  from holding CTP NV EO or generate 10.03% return on investment over 90 days.

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

Ford Motor  vs.  CTP NV EO

Ford Motor

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ford Motor are ranked lower than 1 (%) 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.

CTP NV EO

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CTP NV EO are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, CTP NV may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Ford and CTP NV

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

The idea behind Ford Motor and CTP NV EO 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.