Correlation Between Ford and CS Real

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

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

Diversification Opportunities for Ford and CS Real

-0.77

Correlation Coefficient

Ford  CS Real

Pay attention - limited upside

The 3 months correlation between Ford and CSLP is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and CS Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CS Real Estate 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 CS Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CS Real Estate has no effect on the direction of Ford i.e., Ford and CS Real go up and down completely randomly.

Pair Corralation between Ford and CS Real

Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the CS Real. In addition to that, Ford is 1.49 times more volatile than CS Real Estate. It trades about -0.34 of its total potential returns per unit of risk. CS Real Estate is currently generating about 0.27 per unit of volatility. If you would invest  14,800  in CS Real Estate on September 27, 2024 and sell it today you would earn a total of  750.00  from holding CS Real Estate or generate 5.07% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.45%
Values	Daily Returns

Ford Motor  vs.  CS Real Estate

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.

CS Real Estate

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CS Real Estate are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly stable basic indicators, CS Real is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Ford and CS Real

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

The idea behind Ford Motor and CS Real Estate 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.