Correlation Between Ford and BCN

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

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

Diversification Opportunities for Ford and BCN

0.0

Correlation Coefficient

Ford  BCN

Pay attention - limited upside

The 3 months correlation between Ford and BCN is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and BCN in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BCN 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 BCN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BCN has no effect on the direction of Ford i.e., Ford and BCN go up and down completely randomly.

Pair Corralation between Ford and BCN

Taking into account the 90-day investment horizon Ford Motor is expected to generate 0.09 times more return on investment than BCN. However, Ford Motor is 11.26 times less risky than BCN. It trades about 0.05 of its potential returns per unit of risk. BCN is currently generating about -0.01 per unit of risk. If you would invest  975.00  in Ford Motor on December 26, 2024 and sell it today you would earn a total of  54.00  from holding Ford Motor or generate 5.54% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Ford Motor  vs.  BCN

Ford Motor

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ford Motor are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating technical and fundamental indicators, Ford may actually be approaching a critical reversion point that can send shares even higher in April 2025.

BCN

Risk-Adjusted Performance

Very Weak

Over the last 90 days BCN has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Crypto's basic indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for BCN shareholders.

Pair Trading with Ford and BCN

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

The idea behind Ford Motor and BCN 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.