Correlation Between Ford and Clover Leaf

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

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

Diversification Opportunities for Ford and Clover Leaf

0.26

Correlation Coefficient

Ford  Clover Leaf

Modest diversification

The 3 months correlation between Ford and Clover is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Clover Leaf Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clover Leaf Capital 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 Clover Leaf. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clover Leaf Capital has no effect on the direction of Ford i.e., Ford and Clover Leaf go up and down completely randomly.

Pair Corralation between Ford and Clover Leaf

Taking into account the 90-day investment horizon Ford is expected to generate 4.78 times less return on investment than Clover Leaf. In addition to that, Ford is 1.11 times more volatile than Clover Leaf Capital. It trades about 0.01 of its total potential returns per unit of risk. Clover Leaf Capital is currently generating about 0.04 per unit of volatility. If you would invest  1,104  in Clover Leaf Capital on September 16, 2024 and sell it today you would earn a total of  325.00  from holding Clover Leaf Capital or generate 29.44% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	85.32%
Values	Daily Returns

Ford Motor  vs.  Clover Leaf Capital

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 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.

Clover Leaf Capital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Clover Leaf Capital has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, Clover Leaf is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Ford and Clover Leaf

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

The idea behind Ford Motor and Clover Leaf Capital 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.