Correlation Between Ford and Sharing Services

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

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

Diversification Opportunities for Ford and Sharing Services

-0.05

Correlation Coefficient

Ford  Sharing Services

Good diversification

The 3 months correlation between Ford and Sharing is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Sharing Services Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sharing Services Global 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 Sharing Services. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sharing Services Global has no effect on the direction of Ford i.e., Ford and Sharing Services go up and down completely randomly.

Pair Corralation between Ford and Sharing Services

Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the Sharing Services. But the stock apears to be less risky and, when comparing its historical volatility, Ford Motor is 5.79 times less risky than Sharing Services. The stock trades about 0.0 of its potential returns per unit of risk. The Sharing Services Global is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  882.00  in Sharing Services Global on August 31, 2024 and sell it today you would lose (847.00) from holding Sharing Services Global or give up 96.03% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.73%
Values	Daily Returns

Ford Motor  vs.  Sharing Services Global

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.

Sharing Services Global

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sharing Services Global has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Ford and Sharing Services

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

The idea behind Ford Motor and Sharing Services Global 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.