Correlation Between Ford and PulteGroup,

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

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

Diversification Opportunities for Ford and PulteGroup,

0.39

Correlation Coefficient

Ford  PulteGroup,

Weak diversification

The 3 months correlation between Ford and PulteGroup, is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and PulteGroup, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PulteGroup, 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 PulteGroup,. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PulteGroup, has no effect on the direction of Ford i.e., Ford and PulteGroup, go up and down completely randomly.

Pair Corralation between Ford and PulteGroup,

Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the PulteGroup,. In addition to that, Ford is 1.18 times more volatile than PulteGroup,. It trades about 0.0 of its total potential returns per unit of risk. PulteGroup, is currently generating about 0.1 per unit of volatility. If you would invest  28,346  in PulteGroup, on October 23, 2024 and sell it today you would earn a total of  39,294  from holding PulteGroup, or generate 138.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.39%
Values	Daily Returns

Ford Motor  vs.  PulteGroup,

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.

PulteGroup,

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PulteGroup, has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's technical indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Ford and PulteGroup,

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

The idea behind Ford Motor and PulteGroup, 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.