Correlation Between Ford and Siren DIVCON

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

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

Diversification Opportunities for Ford and Siren DIVCON

0.21

Correlation Coefficient

Ford  Siren DIVCON

Modest diversification

The 3 months correlation between Ford and Siren is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Siren DIVCON Dividend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Siren DIVCON Dividend 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 Siren DIVCON. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Siren DIVCON Dividend has no effect on the direction of Ford i.e., Ford and Siren DIVCON go up and down completely randomly.

Pair Corralation between Ford and Siren DIVCON

Taking into account the 90-day investment horizon Ford Motor is expected to generate 0.8 times more return on investment than Siren DIVCON. However, Ford Motor is 1.24 times less risky than Siren DIVCON. It trades about 0.02 of its potential returns per unit of risk. Siren DIVCON Dividend is currently generating about -0.04 per unit of risk. If you would invest  965.00  in Ford Motor on December 17, 2024 and sell it today you would earn a total of  8.00  from holding Ford Motor or generate 0.83% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Ford Motor  vs.  Siren DIVCON Dividend

Ford Motor

Risk-Adjusted Performance

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 recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Siren DIVCON Dividend

Risk-Adjusted Performance

Very Weak

Over the last 90 days Siren DIVCON Dividend has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Siren DIVCON is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Ford and Siren DIVCON

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

The idea behind Ford Motor and Siren DIVCON Dividend 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.