Correlation Between Ford and Salient Mlp

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

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

Diversification Opportunities for Ford and Salient Mlp

0.4

Correlation Coefficient

Ford  Salient Mlp

Very weak diversification

The 3 months correlation between Ford and Salient is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Salient Mlp Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Salient Mlp Energy 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 Salient Mlp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Salient Mlp Energy has no effect on the direction of Ford i.e., Ford and Salient Mlp go up and down completely randomly.

Pair Corralation between Ford and Salient Mlp

Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the Salient Mlp. In addition to that, Ford is 1.09 times more volatile than Salient Mlp Energy. It trades about -0.36 of its total potential returns per unit of risk. Salient Mlp Energy is currently generating about -0.25 per unit of volatility. If you would invest  1,091  in Salient Mlp Energy on September 29, 2024 and sell it today you would lose (72.00) from holding Salient Mlp Energy or give up 6.6% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.24%
Values	Daily Returns

Ford Motor  vs.  Salient Mlp Energy

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.

Salient Mlp Energy

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Salient Mlp Energy are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Salient Mlp may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Ford and Salient Mlp

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

The idea behind Ford Motor and Salient Mlp Energy 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.