Correlation Between Ford and Alumexx NV

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

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

Diversification Opportunities for Ford and Alumexx NV

-0.1

Correlation Coefficient

Ford  Alumexx NV

Good diversification

The 3 months correlation between Ford and Alumexx is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Alumexx NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alumexx NV 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 Alumexx NV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alumexx NV has no effect on the direction of Ford i.e., Ford and Alumexx NV go up and down completely randomly.

Pair Corralation between Ford and Alumexx NV

Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the Alumexx NV. But the stock apears to be less risky and, when comparing its historical volatility, Ford Motor is 1.71 times less risky than Alumexx NV. The stock trades about -0.31 of its potential returns per unit of risk. The Alumexx NV is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  127.00  in Alumexx NV on September 17, 2024 and sell it today you would earn a total of  1.00  from holding Alumexx NV or generate 0.79% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Ford Motor  vs.  Alumexx NV

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.

Alumexx NV

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Alumexx NV are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Alumexx NV may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Ford and Alumexx NV

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

The idea behind Ford Motor and Alumexx NV 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.