Correlation Between Ford and SOLOCAL GROUP

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

Diversification Opportunities for Ford and SOLOCAL GROUP

0.0

Correlation Coefficient

Ford  SOLOCAL GROUP

Pay attention - limited upside

The 3 months correlation between Ford and SOLOCAL is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and SOLOCAL GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SOLOCAL GROUP 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 SOLOCAL GROUP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SOLOCAL GROUP has no effect on the direction of Ford i.e., Ford and SOLOCAL GROUP go up and down completely randomly.

Pair Corralation between Ford and SOLOCAL GROUP

Taking into account the 90-day investment horizon Ford Motor is expected to generate 1.5 times more return on investment than SOLOCAL GROUP. However, Ford is 1.5 times more volatile than SOLOCAL GROUP. It trades about -0.25 of its potential returns per unit of risk. SOLOCAL GROUP is currently generating about -1.31 per unit of risk. If you would invest  1,039  in Ford Motor on October 14, 2024 and sell it today you would lose (74.00) from holding Ford Motor or give up 7.12% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	42.11%
Values	Daily Returns

Ford Motor  vs.  SOLOCAL GROUP

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 latest unfluctuating performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

SOLOCAL GROUP

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days SOLOCAL GROUP has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather fragile basic indicators, SOLOCAL GROUP exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ford and SOLOCAL GROUP

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

The idea behind Ford Motor and SOLOCAL GROUP 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.