Correlation Between Ford and Alony Hetz

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

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

Diversification Opportunities for Ford and Alony Hetz

-0.71

Correlation Coefficient

Ford  Alony Hetz

Pay attention - limited upside

The 3 months correlation between Ford and Alony is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Alony Hetz Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alony Hetz Properties 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 Alony Hetz. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alony Hetz Properties has no effect on the direction of Ford i.e., Ford and Alony Hetz go up and down completely randomly.

Pair Corralation between Ford and Alony Hetz

Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the Alony Hetz. But the stock apears to be less risky and, when comparing its historical volatility, Ford Motor is 1.34 times less risky than Alony Hetz. The stock trades about -0.09 of its potential returns per unit of risk. The Alony Hetz Properties is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  308,000  in Alony Hetz Properties on December 1, 2024 and sell it today you would earn a total of  37,500  from holding Alony Hetz Properties or generate 12.18% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	86.67%
Values	Daily Returns

Ford Motor  vs.  Alony Hetz Properties

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.

Alony Hetz Properties

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Alony Hetz Properties are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Alony Hetz sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ford and Alony Hetz

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

The idea behind Ford Motor and Alony Hetz Properties 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.