Correlation Between Ford and Marui Group

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

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

Diversification Opportunities for Ford and Marui Group

-0.28

Correlation Coefficient

Ford  Marui Group

Very good diversification

The 3 months correlation between Ford and Marui is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Marui Group Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marui Group 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 Marui Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marui Group has no effect on the direction of Ford i.e., Ford and Marui Group go up and down completely randomly.

Pair Corralation between Ford and Marui Group

Taking into account the 90-day investment horizon Ford is expected to generate 7.25 times less return on investment than Marui Group. But when comparing it to its historical volatility, Ford Motor is 1.63 times less risky than Marui Group. It trades about 0.01 of its potential returns per unit of risk. Marui Group Co is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  3,044  in Marui Group Co on September 28, 2024 and sell it today you would earn a total of  326.00  from holding Marui Group Co or generate 10.71% return on investment over 90 days.

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

Ford Motor  vs.  Marui Group Co

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.

Marui Group

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Marui Group Co are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Marui Group showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ford and Marui Group

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

The idea behind Ford Motor and Marui Group Co 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.