Correlation Between Ford and Redrow Plc

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

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

Diversification Opportunities for Ford and Redrow Plc

0.0

Correlation Coefficient

Ford  Redrow Plc

Pay attention - limited upside

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

Pair Corralation between Ford and Redrow Plc

If you would invest  615.00  in Redrow Plc on September 1, 2024 and sell it today you would earn a total of  0.00  from holding Redrow Plc or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	46.03%
Values	Daily Returns

Ford Motor  vs.  Redrow Plc

Ford Motor

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ford Motor are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. 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.

Redrow Plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Redrow Plc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Redrow Plc is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Ford and Redrow Plc

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

The idea behind Ford Motor and Redrow 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.