Correlation Between Ford and Dfa Inv

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

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

Diversification Opportunities for Ford and Dfa Inv

-0.5

Correlation Coefficient

Ford  Dfa Inv

Very good diversification

The 3 months correlation between Ford and Dfa is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Dfa Inv Dimensions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dfa Inv Dimensions 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 Dfa Inv. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dfa Inv Dimensions has no effect on the direction of Ford i.e., Ford and Dfa Inv go up and down completely randomly.

Pair Corralation between Ford and Dfa Inv

Taking into account the 90-day investment horizon Ford Motor is expected to generate 1.59 times more return on investment than Dfa Inv. However, Ford is 1.59 times more volatile than Dfa Inv Dimensions. It trades about 0.0 of its potential returns per unit of risk. Dfa Inv Dimensions is currently generating about -0.01 per unit of risk. If you would invest  1,083  in Ford Motor on October 12, 2024 and sell it today you would lose (109.00) from holding Ford Motor or give up 10.06% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	20.81%
Values	Daily Returns

Ford Motor  vs.  Dfa Inv Dimensions

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 latest abnormal performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Dfa Inv Dimensions

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dfa Inv Dimensions has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Dfa Inv is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Ford and Dfa Inv

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

The idea behind Ford Motor and Dfa Inv Dimensions 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.