Correlation Between Ford and Deutsche Core

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

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

Diversification Opportunities for Ford and Deutsche Core

0.75

Correlation Coefficient

Ford  Deutsche Core

Poor diversification

The 3 months correlation between Ford and Deutsche is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Deutsche E Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deutsche E Equity 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 Deutsche Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deutsche E Equity has no effect on the direction of Ford i.e., Ford and Deutsche Core go up and down completely randomly.

Pair Corralation between Ford and Deutsche Core

Taking into account the 90-day investment horizon Ford is expected to generate 30.0 times less return on investment than Deutsche Core. In addition to that, Ford is 2.46 times more volatile than Deutsche E Equity. It trades about 0.0 of its total potential returns per unit of risk. Deutsche E Equity is currently generating about 0.07 per unit of volatility. If you would invest  2,585  in Deutsche E Equity on December 4, 2024 and sell it today you would earn a total of  875.00  from holding Deutsche E Equity or generate 33.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Ford Motor  vs.  Deutsche E Equity

Ford Motor

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ford Motor has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Deutsche E Equity

Risk-Adjusted Performance

Very Weak

Over the last 90 days Deutsche E Equity has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's forward indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Ford and Deutsche Core

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

The idea behind Ford Motor and Deutsche E Equity 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.