Correlation Between Ford and Rejlers AB

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

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

Diversification Opportunities for Ford and Rejlers AB

-0.64

Correlation Coefficient

Ford  Rejlers AB

Excellent diversification

The 3 months correlation between Ford and Rejlers is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Rejlers AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rejlers AB 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 Rejlers AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rejlers AB has no effect on the direction of Ford i.e., Ford and Rejlers AB go up and down completely randomly.

Pair Corralation between Ford and Rejlers AB

Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the Rejlers AB. In addition to that, Ford is 1.19 times more volatile than Rejlers AB. It trades about -0.09 of its total potential returns per unit of risk. Rejlers AB is currently generating about 0.18 per unit of volatility. If you would invest  14,240  in Rejlers AB on December 1, 2024 and sell it today you would earn a total of  2,360  from holding Rejlers AB or generate 16.57% return on investment over 90 days.

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

Ford Motor  vs.  Rejlers AB

Ford Motor

Risk-Adjusted Performance

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.

Rejlers AB

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Rejlers AB are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain forward-looking indicators, Rejlers AB sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ford and Rejlers AB

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

The idea behind Ford Motor and Rejlers AB 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.