Correlation Between Ford and Compagnie Des

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

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

Diversification Opportunities for Ford and Compagnie Des

0.19

Correlation Coefficient

Ford  Compagnie Des

Average diversification

The 3 months correlation between Ford and Compagnie is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Compagnie des Alpes in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compagnie des Alpes 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 Compagnie Des. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compagnie des Alpes has no effect on the direction of Ford i.e., Ford and Compagnie Des go up and down completely randomly.

Pair Corralation between Ford and Compagnie Des

Taking into account the 90-day investment horizon Ford is expected to generate 1.54 times less return on investment than Compagnie Des. In addition to that, Ford is 1.62 times more volatile than Compagnie des Alpes. It trades about 0.04 of its total potential returns per unit of risk. Compagnie des Alpes is currently generating about 0.09 per unit of volatility. If you would invest  1,415  in Compagnie des Alpes on December 28, 2024 and sell it today you would earn a total of  103.00  from holding Compagnie des Alpes or generate 7.28% return on investment over 90 days.

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

Ford Motor  vs.  Compagnie des Alpes

Ford Motor

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ford Motor are ranked lower than 2 (%) 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 recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Compagnie des Alpes

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Compagnie des Alpes are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Compagnie Des may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Ford and Compagnie Des

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

The idea behind Ford Motor and Compagnie des Alpes 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.