Correlation Between Ford and JPMF Global

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

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

Diversification Opportunities for Ford and JPMF Global

0.52

Correlation Coefficient

Ford  JPMF Global

Very weak diversification

The 3 months correlation between Ford and JPMF is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and JPMF Global Natural in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JPMF Global Natural 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 JPMF Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JPMF Global Natural has no effect on the direction of Ford i.e., Ford and JPMF Global go up and down completely randomly.

Pair Corralation between Ford and JPMF Global

Taking into account the 90-day investment horizon Ford Motor is expected to generate 1.8 times more return on investment than JPMF Global. However, Ford is 1.8 times more volatile than JPMF Global Natural. It trades about -0.23 of its potential returns per unit of risk. JPMF Global Natural is currently generating about -0.49 per unit of risk. If you would invest  1,080  in Ford Motor on September 22, 2024 and sell it today you would lose (92.00) from holding Ford Motor or give up 8.52% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.45%
Values	Daily Returns

Ford Motor  vs.  JPMF Global Natural

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.

JPMF Global Natural

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days JPMF Global Natural has generated negative risk-adjusted returns adding no value to fund investors. In spite of rather sound technical and fundamental indicators, JPMF Global 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 JPMF Global

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

The idea behind Ford Motor and JPMF Global Natural 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.