Correlation Between Ford and Apartment Income

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

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

Diversification Opportunities for Ford and Apartment Income

0.22

Correlation Coefficient

Ford  Apartment Income

Modest diversification

The 3 months correlation between Ford and Apartment is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Apartment Income REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apartment Income REIT 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 Apartment Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apartment Income REIT has no effect on the direction of Ford i.e., Ford and Apartment Income go up and down completely randomly.

Pair Corralation between Ford and Apartment Income

If you would invest  3,908  in Apartment Income REIT on September 12, 2024 and sell it today you would earn a total of  0.00  from holding Apartment Income REIT or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	4.76%
Values	Daily Returns

Ford Motor  vs.  Apartment Income REIT

Ford Motor

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ford Motor are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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.

Apartment Income REIT

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Apartment Income REIT has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Apartment Income is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Ford and Apartment Income

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

The idea behind Ford Motor and Apartment Income REIT 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.