Correlation Between Ford and Expat Slovakia

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

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

Diversification Opportunities for Ford and Expat Slovakia

0.2

Correlation Coefficient

Ford  Expat Slovakia

Modest diversification

The 3 months correlation between Ford and Expat is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Expat Slovakia Sax in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Expat Slovakia Sax 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 Expat Slovakia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Expat Slovakia Sax has no effect on the direction of Ford i.e., Ford and Expat Slovakia go up and down completely randomly.

Pair Corralation between Ford and Expat Slovakia

Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the Expat Slovakia. In addition to that, Ford is 2.63 times more volatile than Expat Slovakia Sax. It trades about -0.06 of its total potential returns per unit of risk. Expat Slovakia Sax is currently generating about -0.04 per unit of volatility. If you would invest  55.00  in Expat Slovakia Sax on October 7, 2024 and sell it today you would lose (3.00) from holding Expat Slovakia Sax or give up 5.45% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.21%
Values	Daily Returns

Ford Motor  vs.  Expat Slovakia Sax

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.

Expat Slovakia Sax

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Expat Slovakia Sax has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Expat Slovakia is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Ford and Expat Slovakia

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

The idea behind Ford Motor and Expat Slovakia Sax 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 Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..