Correlation Between Ford and Mcig

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

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

Diversification Opportunities for Ford and Mcig

-0.41

Correlation Coefficient

Ford  Mcig

Very good diversification

The 3 months correlation between Ford and Mcig is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Mcig Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mcig Inc 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 Mcig. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mcig Inc has no effect on the direction of Ford i.e., Ford and Mcig go up and down completely randomly.

Pair Corralation between Ford and Mcig

Taking into account the 90-day investment horizon Ford is expected to generate 1.76 times less return on investment than Mcig. But when comparing it to its historical volatility, Ford Motor is 6.88 times less risky than Mcig. It trades about 0.05 of its potential returns per unit of risk. Mcig Inc is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  0.71  in Mcig Inc on December 25, 2024 and sell it today you would lose (0.26) from holding Mcig Inc or give up 36.62% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	96.77%
Values	Daily Returns

Ford Motor  vs.  Mcig Inc

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.

Mcig Inc

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Mcig Inc are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly fragile basic indicators, Mcig may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Ford and Mcig

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

The idea behind Ford Motor and Mcig Inc 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.