Correlation Between Ford and Applicad Public

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

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

Diversification Opportunities for Ford and Applicad Public

-0.08

Correlation Coefficient

Ford  Applicad Public

Good diversification

The 3 months correlation between Ford and Applicad is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Applicad Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Applicad Public 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 Applicad Public. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Applicad Public has no effect on the direction of Ford i.e., Ford and Applicad Public go up and down completely randomly.

Pair Corralation between Ford and Applicad Public

Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the Applicad Public. But the stock apears to be less risky and, when comparing its historical volatility, Ford Motor is 1.48 times less risky than Applicad Public. The stock trades about -0.1 of its potential returns per unit of risk. The Applicad Public is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest  176.00  in Applicad Public on September 22, 2024 and sell it today you would lose (18.00) from holding Applicad Public or give up 10.23% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.35%
Values	Daily Returns

Ford Motor  vs.  Applicad Public

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.

Applicad Public

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Applicad Public are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Applicad Public disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ford and Applicad Public

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

The idea behind Ford Motor and Applicad Public 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.

Check out your portfolio center.

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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.