Correlation Between Ford and Portmeirion Group

Can any of the company-specific risk be diversified away by investing in both Ford and Portmeirion 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 Portmeirion 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 Portmeirion Group PLC, you can compare the effects of market volatilities on Ford and Portmeirion 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 Portmeirion Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Portmeirion Group.

Diversification Opportunities for Ford and Portmeirion Group

0.11

Correlation Coefficient

Ford  Portmeirion Group

Average diversification

The 3 months correlation between Ford and Portmeirion is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Portmeirion Group PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Portmeirion Group PLC 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 Portmeirion Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Portmeirion Group PLC has no effect on the direction of Ford i.e., Ford and Portmeirion Group go up and down completely randomly.

Pair Corralation between Ford and Portmeirion Group

Taking into account the 90-day investment horizon Ford Motor is expected to generate 0.64 times more return on investment than Portmeirion Group. However, Ford Motor is 1.55 times less risky than Portmeirion Group. It trades about 0.05 of its potential returns per unit of risk. Portmeirion Group PLC is currently generating about -0.13 per unit of risk. If you would invest  975.00  in Ford Motor on December 26, 2024 and sell it today you would earn a total of  54.00  from holding Ford Motor or generate 5.54% return on investment over 90 days.

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

Ford Motor  vs.  Portmeirion Group PLC

Ford Motor

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ford Motor are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating technical and fundamental indicators, Ford may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Portmeirion Group PLC

Risk-Adjusted Performance

Very Weak

Over the last 90 days Portmeirion Group PLC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's primary indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Ford and Portmeirion Group

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

The idea behind Ford Motor and Portmeirion Group PLC 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.