Correlation Between Ford and Deka Deutsche

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

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

Diversification Opportunities for Ford and Deka Deutsche

0.11

Correlation Coefficient

Ford  Deka Deutsche

Average diversification

The 3 months correlation between Ford and Deka is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Deka Deutsche Brse in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deka Deutsche Brse 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 Deka Deutsche. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deka Deutsche Brse has no effect on the direction of Ford i.e., Ford and Deka Deutsche go up and down completely randomly.

Pair Corralation between Ford and Deka Deutsche

Taking into account the 90-day investment horizon Ford Motor is expected to generate 22.93 times more return on investment than Deka Deutsche. However, Ford is 22.93 times more volatile than Deka Deutsche Brse. It trades about 0.01 of its potential returns per unit of risk. Deka Deutsche Brse is currently generating about 0.11 per unit of risk. If you would invest  988.00  in Ford Motor on September 21, 2024 and sell it today you would lose (19.00) from holding Ford Motor or give up 1.92% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.02%
Values	Daily Returns

Ford Motor  vs.  Deka Deutsche Brse

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 unfluctuating 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.

Deka Deutsche Brse

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Deka Deutsche Brse are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Deka Deutsche is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Ford and Deka Deutsche

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

The idea behind Ford Motor and Deka Deutsche Brse 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.