Correlation Between Ford and White Fox

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

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

Diversification Opportunities for Ford and White Fox

0.48

Correlation Coefficient

Ford  White Fox

Very weak diversification

The 3 months correlation between Ford and White is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and White Fox Ventures in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on White Fox Ventures 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 White Fox. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of White Fox Ventures has no effect on the direction of Ford i.e., Ford and White Fox go up and down completely randomly.

Pair Corralation between Ford and White Fox

Taking into account the 90-day investment horizon Ford Motor is expected to generate 0.11 times more return on investment than White Fox. However, Ford Motor is 8.99 times less risky than White Fox. It trades about -0.21 of its potential returns per unit of risk. White Fox Ventures is currently generating about -0.37 per unit of risk. If you would invest  1,073  in Ford Motor on September 21, 2024 and sell it today you would lose (85.00) from holding Ford Motor or give up 7.92% of portfolio value over 90 days.

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

Ford Motor  vs.  White Fox Ventures

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.

White Fox Ventures

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in White Fox Ventures are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, White Fox showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ford and White Fox

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

The idea behind Ford Motor and White Fox Ventures 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 CEOs Directory module to screen CEOs from public companies around the world.