Correlation Between Ford and Industrivarden

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

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

Diversification Opportunities for Ford and Industrivarden

-0.14

Correlation Coefficient

Ford  Industrivarden

Good diversification

The 3 months correlation between Ford and Industrivarden is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Industrivarden AB ser in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Industrivarden AB ser 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 Industrivarden. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Industrivarden AB ser has no effect on the direction of Ford i.e., Ford and Industrivarden go up and down completely randomly.

Pair Corralation between Ford and Industrivarden

Taking into account the 90-day investment horizon Ford Motor is expected to generate 2.15 times more return on investment than Industrivarden. However, Ford is 2.15 times more volatile than Industrivarden AB ser. It trades about 0.02 of its potential returns per unit of risk. Industrivarden AB ser is currently generating about 0.04 per unit of risk. If you would invest  1,080  in Ford Motor on September 4, 2024 and sell it today you would earn a total of  18.00  from holding Ford Motor or generate 1.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

Ford Motor  vs.  Industrivarden AB ser

Ford Motor

Risk-Adjusted Performance

1 of 100

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

Industrivarden AB ser

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Industrivarden AB ser are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental indicators, Industrivarden 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 Industrivarden

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

The idea behind Ford Motor and Industrivarden AB ser 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 Commodity Directory module to find actively traded commodities issued by global exchanges.