Correlation Between Ford and Assicurazioni Generali

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

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

Diversification Opportunities for Ford and Assicurazioni Generali

0.02

Correlation Coefficient

Ford  Assicurazioni Generali

Significant diversification

The 3 months correlation between Ford and Assicurazioni is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Assicurazioni Generali SpA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Assicurazioni Generali 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 Assicurazioni Generali. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Assicurazioni Generali has no effect on the direction of Ford i.e., Ford and Assicurazioni Generali go up and down completely randomly.

Pair Corralation between Ford and Assicurazioni Generali

Taking into account the 90-day investment horizon Ford is expected to generate 5.82 times less return on investment than Assicurazioni Generali. In addition to that, Ford is 1.77 times more volatile than Assicurazioni Generali SpA. It trades about 0.02 of its total potential returns per unit of risk. Assicurazioni Generali SpA is currently generating about 0.23 per unit of volatility. If you would invest  2,734  in Assicurazioni Generali SpA on December 29, 2024 and sell it today you would earn a total of  505.00  from holding Assicurazioni Generali SpA or generate 18.47% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.31%
Values	Daily Returns

Ford Motor  vs.  Assicurazioni Generali SpA

Ford Motor

Risk-Adjusted Performance

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 latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Assicurazioni Generali

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Assicurazioni Generali SpA are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Assicurazioni Generali reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ford and Assicurazioni Generali

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

The idea behind Ford Motor and Assicurazioni Generali SpA 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.