Correlation Between Ford and Nicoccino Holding

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

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

Diversification Opportunities for Ford and Nicoccino Holding

-0.28

Correlation Coefficient

Ford  Nicoccino Holding

Very good diversification

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

Pair Corralation between Ford and Nicoccino Holding

Taking into account the 90-day investment horizon Ford is expected to generate 18.99 times less return on investment than Nicoccino Holding. But when comparing it to its historical volatility, Ford Motor is 8.17 times less risky than Nicoccino Holding. It trades about 0.05 of its potential returns per unit of risk. Nicoccino Holding AB is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  110.00  in Nicoccino Holding AB on December 21, 2024 and sell it today you would earn a total of  50.00  from holding Nicoccino Holding AB or generate 45.45% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	91.67%
Values	Daily Returns

Ford Motor  vs.  Nicoccino Holding AB

Ford Motor

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ford Motor are ranked lower than 3 (%) 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.

Nicoccino Holding

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nicoccino Holding AB are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Nicoccino Holding unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ford and Nicoccino Holding

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

The idea behind Ford Motor and Nicoccino Holding AB 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.