Correlation Between Ford and Ims Health

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

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

Diversification Opportunities for Ford and Ims Health

0.0

Correlation Coefficient

Ford  Ims Health

Pay attention - limited upside

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

Pair Corralation between Ford and Ims Health

If you would invest (100.00) in Ims Health on October 11, 2024 and sell it today you would earn a total of  100.00  from holding Ims Health or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Ford Motor  vs.  Ims Health

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 abnormal 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.

Ims Health

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ims Health has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Ims Health is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Ford and Ims Health

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

The idea behind Ford Motor and Ims Health 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.