Correlation Between Ford and Fondo Mutuo

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

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

Diversification Opportunities for Ford and Fondo Mutuo

0.23

Correlation Coefficient

Ford  Fondo Mutuo

Modest diversification

The 3 months correlation between Ford and Fondo is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Fondo Mutuo ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fondo Mutuo ETF 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 Fondo Mutuo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fondo Mutuo ETF has no effect on the direction of Ford i.e., Ford and Fondo Mutuo go up and down completely randomly.

Pair Corralation between Ford and Fondo Mutuo

Taking into account the 90-day investment horizon Ford is expected to generate 2.07 times less return on investment than Fondo Mutuo. In addition to that, Ford is 2.62 times more volatile than Fondo Mutuo ETF. It trades about 0.01 of its total potential returns per unit of risk. Fondo Mutuo ETF is currently generating about 0.04 per unit of volatility. If you would invest  116,660  in Fondo Mutuo ETF on September 3, 2024 and sell it today you would earn a total of  20,820  from holding Fondo Mutuo ETF or generate 17.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.99%
Values	Daily Returns

Ford Motor  vs.  Fondo Mutuo ETF

Ford Motor

Risk-Adjusted Performance

1 of 100

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.

Fondo Mutuo ETF

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Fondo Mutuo ETF are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental indicators, Fondo Mutuo is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Ford and Fondo Mutuo

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

The idea behind Ford Motor and Fondo Mutuo ETF 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.