Correlation Between Ford and Secure Property

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

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

Diversification Opportunities for Ford and Secure Property

0.27

Correlation Coefficient

Ford  Secure Property

Modest diversification

The 3 months correlation between Ford and Secure is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Secure Property Development in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Secure Property Deve 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 Secure Property. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Secure Property Deve has no effect on the direction of Ford i.e., Ford and Secure Property go up and down completely randomly.

Pair Corralation between Ford and Secure Property

Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the Secure Property. In addition to that, Ford is 2.31 times more volatile than Secure Property Development. It trades about -0.01 of its total potential returns per unit of risk. Secure Property Development is currently generating about 0.09 per unit of volatility. If you would invest  400.00  in Secure Property Development on September 12, 2024 and sell it today you would earn a total of  50.00  from holding Secure Property Development or generate 12.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	97.64%
Values	Daily Returns

Ford Motor  vs.  Secure Property Development

Ford Motor

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ford Motor are ranked lower than 1 (%) 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.

Secure Property Deve

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days Secure Property Development has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Secure Property is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Ford and Secure Property

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

The idea behind Ford Motor and Secure Property Development 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.