Correlation Between Ford and Lever Global

Can any of the company-specific risk be diversified away by investing in both Ford and Lever 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 Lever 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 Lever Global, you can compare the effects of market volatilities on Ford and Lever 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 Lever Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Lever Global.

Diversification Opportunities for Ford and Lever Global

-0.29

Correlation Coefficient

Ford  Lever Global

Very good diversification

The 3 months correlation between Ford and Lever is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Lever Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lever Global 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 Lever Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lever Global has no effect on the direction of Ford i.e., Ford and Lever Global go up and down completely randomly.

Pair Corralation between Ford and Lever Global

Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the Lever Global. But the stock apears to be less risky and, when comparing its historical volatility, Ford Motor is 3.45 times less risky than Lever Global. The stock trades about 0.0 of its potential returns per unit of risk. The Lever Global is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  75.00  in Lever Global on October 3, 2024 and sell it today you would earn a total of  248.00  from holding Lever Global or generate 330.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	60.2%
Values	Daily Returns

Ford Motor  vs.  Lever Global

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 nearly stable technical and fundamental indicators, Ford is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Lever Global

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Lever Global are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady technical and fundamental indicators, Lever Global reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ford and Lever Global

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

The idea behind Ford Motor and Lever Global 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.