Correlation Between Ford and PROCIMMO RESIDENTIAL

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

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

Diversification Opportunities for Ford and PROCIMMO RESIDENTIAL

-0.25

Correlation Coefficient

Ford  PROCIMMO RESIDENTIAL

Very good diversification

The 3 months correlation between Ford and PROCIMMO is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and PROCIMMO RESIDENTIAL LEMANIC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PROCIMMO RESIDENTIAL 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 PROCIMMO RESIDENTIAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PROCIMMO RESIDENTIAL has no effect on the direction of Ford i.e., Ford and PROCIMMO RESIDENTIAL go up and down completely randomly.

Pair Corralation between Ford and PROCIMMO RESIDENTIAL

Taking into account the 90-day investment horizon Ford Motor is expected to generate 2.31 times more return on investment than PROCIMMO RESIDENTIAL. However, Ford is 2.31 times more volatile than PROCIMMO RESIDENTIAL LEMANIC. It trades about 0.01 of its potential returns per unit of risk. PROCIMMO RESIDENTIAL LEMANIC is currently generating about 0.01 per unit of risk. If you would invest  1,073  in Ford Motor on September 29, 2024 and sell it today you would lose (70.00) from holding Ford Motor or give up 6.52% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.16%
Values	Daily Returns

Ford Motor  vs.  PROCIMMO RESIDENTIAL LEMANIC

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.

PROCIMMO RESIDENTIAL

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in PROCIMMO RESIDENTIAL LEMANIC are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly stable basic indicators, PROCIMMO RESIDENTIAL is not utilizing all of its potentials. The new stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Ford and PROCIMMO RESIDENTIAL

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

The idea behind Ford Motor and PROCIMMO RESIDENTIAL LEMANIC 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.