Correlation Between Ford and Altegris/aaca Opportunistic

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

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

Diversification Opportunities for Ford and Altegris/aaca Opportunistic

0.43

Correlation Coefficient

Ford  Altegris/aaca Opportunistic

Very weak diversification

The 3 months correlation between Ford and Altegris/aaca is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Altegrisaaca Opportunistic Rea in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Altegris/aaca Opportunistic 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 Altegris/aaca Opportunistic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Altegris/aaca Opportunistic has no effect on the direction of Ford i.e., Ford and Altegris/aaca Opportunistic go up and down completely randomly.

Pair Corralation between Ford and Altegris/aaca Opportunistic

Taking into account the 90-day investment horizon Ford is expected to generate 1.35 times less return on investment than Altegris/aaca Opportunistic. In addition to that, Ford is 1.87 times more volatile than Altegrisaaca Opportunistic Real. It trades about 0.01 of its total potential returns per unit of risk. Altegrisaaca Opportunistic Real is currently generating about 0.02 per unit of volatility. If you would invest  1,224  in Altegrisaaca Opportunistic Real on October 20, 2024 and sell it today you would earn a total of  67.00  from holding Altegrisaaca Opportunistic Real or generate 5.47% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.6%
Values	Daily Returns

Ford Motor  vs.  Altegrisaaca Opportunistic Rea

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.

Altegris/aaca Opportunistic

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Altegrisaaca Opportunistic Real has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Altegris/aaca Opportunistic is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Ford and Altegris/aaca Opportunistic

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

The idea behind Ford Motor and Altegrisaaca Opportunistic Real 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.