Correlation Between Ford and Vate Technology

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

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

Diversification Opportunities for Ford and Vate Technology

-0.08

Correlation Coefficient

Ford  Vate Technology

Good diversification

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

Pair Corralation between Ford and Vate Technology

Taking into account the 90-day investment horizon Ford Motor is expected to generate 0.94 times more return on investment than Vate Technology. However, Ford Motor is 1.07 times less risky than Vate Technology. It trades about -0.02 of its potential returns per unit of risk. Vate Technology Co is currently generating about -0.03 per unit of risk. If you would invest  1,126  in Ford Motor on December 4, 2024 and sell it today you would lose (187.00) from holding Ford Motor or give up 16.61% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.37%
Values	Daily Returns

Ford Motor  vs.  Vate Technology Co

Ford Motor

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ford Motor has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Vate Technology

Risk-Adjusted Performance

Very Weak

Over the last 90 days Vate Technology Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Vate Technology is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Ford and Vate Technology

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

The idea behind Ford Motor and Vate Technology Co 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.