Correlation Between Ford and FlexShares International

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

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

Diversification Opportunities for Ford and FlexShares International

0.13

Correlation Coefficient

Ford  FlexShares International

Average diversification

The 3 months correlation between Ford and FlexShares is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and FlexShares International Quali in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FlexShares International 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 FlexShares International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FlexShares International has no effect on the direction of Ford i.e., Ford and FlexShares International go up and down completely randomly.

Pair Corralation between Ford and FlexShares International

Taking into account the 90-day investment horizon Ford is expected to generate 1.51 times less return on investment than FlexShares International. In addition to that, Ford is 2.52 times more volatile than FlexShares International Quality. It trades about 0.06 of its total potential returns per unit of risk. FlexShares International Quality is currently generating about 0.23 per unit of volatility. If you would invest  2,312  in FlexShares International Quality on December 20, 2024 and sell it today you would earn a total of  262.00  from holding FlexShares International Quality or generate 11.33% return on investment over 90 days.

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

Ford Motor  vs.  FlexShares International Quali

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.

FlexShares International

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in FlexShares International Quality are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady fundamental indicators, FlexShares International may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Ford and FlexShares International

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

The idea behind Ford Motor and FlexShares International Quality 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..