Correlation Between Ford and A2Z SMART

Can any of the company-specific risk be diversified away by investing in both Ford and A2Z SMART 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 A2Z SMART into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Ford Motor and A2Z SMART TECHNOLOGIES, you can compare the effects of market volatilities on Ford and A2Z SMART 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 A2Z SMART. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and A2Z SMART.

Diversification Opportunities for Ford and A2Z SMART

0.28

Correlation Coefficient

Ford  A2Z SMART

Modest diversification

The 3 months correlation between Ford and A2Z is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and A2Z SMART TECHNOLOGIES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on A2Z SMART TECHNOLOGIES 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 A2Z SMART. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of A2Z SMART TECHNOLOGIES has no effect on the direction of Ford i.e., Ford and A2Z SMART go up and down completely randomly.

Pair Corralation between Ford and A2Z SMART

Taking into account the 90-day investment horizon Ford is expected to generate 15.85 times less return on investment than A2Z SMART. But when comparing it to its historical volatility, Ford Motor is 4.5 times less risky than A2Z SMART. It trades about 0.02 of its potential returns per unit of risk. A2Z SMART TECHNOLOGIES is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  203.00  in A2Z SMART TECHNOLOGIES on September 17, 2024 and sell it today you would earn a total of  412.00  from holding A2Z SMART TECHNOLOGIES or generate 202.96% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.2%
Values	Daily Returns

Ford Motor  vs.  A2Z SMART TECHNOLOGIES

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.

A2Z SMART TECHNOLOGIES

Risk-Adjusted Performance

0 of 100

Solid

Over the last 90 days A2Z SMART TECHNOLOGIES has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly uncertain basic indicators, A2Z SMART reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ford and A2Z SMART

The main advantage of trading using opposite Ford and A2Z SMART positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, A2Z SMART 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 A2Z SMART will offset losses from the drop in A2Z SMART's long position.

The idea behind Ford Motor and A2Z SMART TECHNOLOGIES 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.