Correlation Between Ford and Ahren Acquisition

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

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

Diversification Opportunities for Ford and Ahren Acquisition

0.21

Correlation Coefficient

Ford  Ahren Acquisition

Modest diversification

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

Pair Corralation between Ford and Ahren Acquisition

Taking into account the 90-day investment horizon Ford Motor is expected to generate 3.23 times more return on investment than Ahren Acquisition. However, Ford is 3.23 times more volatile than Ahren Acquisition Corp. It trades about 0.02 of its potential returns per unit of risk. Ahren Acquisition Corp is currently generating about 0.04 per unit of risk. If you would invest  926.00  in Ford Motor on September 18, 2024 and sell it today you would earn a total of  73.00  from holding Ford Motor or generate 7.88% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	24.85%
Values	Daily Returns

Ford Motor  vs.  Ahren Acquisition Corp

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 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.

Ahren Acquisition Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ahren Acquisition Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Ahren Acquisition is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Ford and Ahren Acquisition

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

The idea behind Ford Motor and Ahren Acquisition Corp 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.