Correlation Between Ford and Fidelity MSCI

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

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

Diversification Opportunities for Ford and Fidelity MSCI

-0.12

Correlation Coefficient

Ford  Fidelity MSCI

Good diversification

The 3 months correlation between Ford and Fidelity is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Fidelity MSCI Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity MSCI Real 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 Fidelity MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity MSCI Real has no effect on the direction of Ford i.e., Ford and Fidelity MSCI go up and down completely randomly.

Pair Corralation between Ford and Fidelity MSCI

Taking into account the 90-day investment horizon Ford Motor is expected to generate 1.89 times more return on investment than Fidelity MSCI. However, Ford is 1.89 times more volatile than Fidelity MSCI Real. It trades about 0.06 of its potential returns per unit of risk. Fidelity MSCI Real is currently generating about 0.04 per unit of risk. If you would invest  971.00  in Ford Motor on December 27, 2024 and sell it today you would earn a total of  58.00  from holding Ford Motor or generate 5.97% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Ford Motor  vs.  Fidelity MSCI Real

Ford Motor

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ford Motor are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating technical and fundamental indicators, Ford may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Fidelity MSCI Real

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity MSCI Real are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent technical and fundamental indicators, Fidelity MSCI is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Ford and Fidelity MSCI

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

The idea behind Ford Motor and Fidelity MSCI Real 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.