Correlation Between Ford and Msvif Mid

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

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

Diversification Opportunities for Ford and Msvif Mid

0.08

Correlation Coefficient

Ford  Msvif Mid

Significant diversification

The 3 months correlation between Ford and Msvif is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Msvif Mid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Msvif Mid Cap 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 Msvif Mid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Msvif Mid Cap has no effect on the direction of Ford i.e., Ford and Msvif Mid go up and down completely randomly.

Pair Corralation between Ford and Msvif Mid

Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the Msvif Mid. In addition to that, Ford is 1.13 times more volatile than Msvif Mid Cap. It trades about -0.04 of its total potential returns per unit of risk. Msvif Mid Cap is currently generating about 0.23 per unit of volatility. If you would invest  481.00  in Msvif Mid Cap on September 21, 2024 and sell it today you would earn a total of  184.00  from holding Msvif Mid Cap or generate 38.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.82%
Values	Daily Returns

Ford Motor  vs.  Msvif Mid Cap

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.

Msvif Mid Cap

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Msvif Mid Cap are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Msvif Mid showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ford and Msvif Mid

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

The idea behind Ford Motor and Msvif Mid Cap 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.