Correlation Between Ford and Menif Financial

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

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

Diversification Opportunities for Ford and Menif Financial

-0.05

Correlation Coefficient

Ford  Menif Financial

Good diversification

The 3 months correlation between Ford and Menif is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Menif Financial Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Menif Financial Services 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 Menif Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Menif Financial Services has no effect on the direction of Ford i.e., Ford and Menif Financial go up and down completely randomly.

Pair Corralation between Ford and Menif Financial

Taking into account the 90-day investment horizon Ford is expected to generate 6.06 times less return on investment than Menif Financial. But when comparing it to its historical volatility, Ford Motor is 1.23 times less risky than Menif Financial. It trades about 0.03 of its potential returns per unit of risk. Menif Financial Services is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  150,060  in Menif Financial Services on December 27, 2024 and sell it today you would earn a total of  23,740  from holding Menif Financial Services or generate 15.82% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	83.61%
Values	Daily Returns

Ford Motor  vs.  Menif Financial Services

Ford Motor

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ford Motor are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. 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.

Menif Financial Services

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Menif Financial Services are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Menif Financial sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ford and Menif Financial

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

The idea behind Ford Motor and Menif Financial Services 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.