Correlation Between Ford and Alan Allman

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

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

Diversification Opportunities for Ford and Alan Allman

0.21

Correlation Coefficient

Ford  Alan Allman

Modest diversification

The 3 months correlation between Ford and Alan is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Alan Allman Associates in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alan Allman Associates 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 Alan Allman. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alan Allman Associates has no effect on the direction of Ford i.e., Ford and Alan Allman go up and down completely randomly.

Pair Corralation between Ford and Alan Allman

Taking into account the 90-day investment horizon Ford Motor is expected to generate 0.57 times more return on investment than Alan Allman. However, Ford Motor is 1.76 times less risky than Alan Allman. It trades about -0.01 of its potential returns per unit of risk. Alan Allman Associates is currently generating about -0.05 per unit of risk. If you would invest  1,094  in Ford Motor on October 7, 2024 and sell it today you would lose (106.00) from holding Ford Motor or give up 9.69% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.41%
Values	Daily Returns

Ford Motor  vs.  Alan Allman Associates

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.

Alan Allman Associates

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Alan Allman Associates are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Alan Allman may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Ford and Alan Allman

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

The idea behind Ford Motor and Alan Allman Associates 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.