Correlation Between Ford and Sparinvest Emerging

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

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

Diversification Opportunities for Ford and Sparinvest Emerging

0.0

Correlation Coefficient

Ford  Sparinvest Emerging

Pay attention - limited upside

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

Pair Corralation between Ford and Sparinvest Emerging

If you would invest  959.00  in Ford Motor on December 21, 2024 and sell it today you would earn a total of  42.00  from holding Ford Motor or generate 4.38% return on investment over 90 days.

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

Ford Motor  vs.  Sparinvest Emerging

Ford Motor

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ford Motor are ranked lower than 3 (%) 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.

Sparinvest Emerging

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sparinvest Emerging has generated negative risk-adjusted returns adding no value to fund investors. Despite quite persistent forward indicators, Sparinvest Emerging is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Ford and Sparinvest Emerging

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

The idea behind Ford Motor and Sparinvest Emerging 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.