Correlation Between Ford and Pampa Energía

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

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

Diversification Opportunities for Ford and Pampa Energía

0.15

Correlation Coefficient

Ford  Pampa Energía

Average diversification

The 3 months correlation between Ford and Pampa is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Pampa Energa SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pampa Energa SA 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 Pampa Energía. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pampa Energa SA has no effect on the direction of Ford i.e., Ford and Pampa Energía go up and down completely randomly.

Pair Corralation between Ford and Pampa Energía

Taking into account the 90-day investment horizon Ford Motor is expected to generate 0.76 times more return on investment than Pampa Energía. However, Ford Motor is 1.32 times less risky than Pampa Energía. It trades about -0.04 of its potential returns per unit of risk. Pampa Energa SA is currently generating about -0.31 per unit of risk. If you would invest  958.00  in Ford Motor on December 5, 2024 and sell it today you would lose (19.00) from holding Ford Motor or give up 1.98% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Ford Motor  vs.  Pampa Energa SA

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.

Pampa Energa SA

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Ford and Pampa Energía

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

The idea behind Ford Motor and Pampa Energa SA 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.