Correlation Between Ford and Inland Real

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

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

Diversification Opportunities for Ford and Inland Real

0.41

Correlation Coefficient

Ford  Inland Real

Very weak diversification

The 3 months correlation between Ford and Inland is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Inland Real Estateome in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inland Real Estateome 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 Inland Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inland Real Estateome has no effect on the direction of Ford i.e., Ford and Inland Real go up and down completely randomly.

Pair Corralation between Ford and Inland Real

Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the Inland Real. But the stock apears to be less risky and, when comparing its historical volatility, Ford Motor is 149.85 times less risky than Inland Real. The stock trades about -0.25 of its potential returns per unit of risk. The Inland Real Estateome is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  1,100  in Inland Real Estateome on October 11, 2024 and sell it today you would lose (30.00) from holding Inland Real Estateome or give up 2.73% of portfolio value over 90 days.

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

Ford Motor  vs.  Inland Real Estateome

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.

Inland Real Estateome

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Inland Real Estateome are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather conflicting basic indicators, Inland Real exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ford and Inland Real

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

The idea behind Ford Motor and Inland Real Estateome 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.