Correlation Between Ford and Timothy Large/mid-cap

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

By analyzing existing cross correlation between Ford Motor and Timothy Largemid Cap Value, you can compare the effects of market volatilities on Ford and Timothy Large/mid-cap 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 Timothy Large/mid-cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Timothy Large/mid-cap.

Diversification Opportunities for Ford and Timothy Large/mid-cap

0.8

Correlation Coefficient

Ford  Timothy Large/mid-cap

Very poor diversification

The 3 months correlation between Ford and Timothy is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Timothy Largemid Cap Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Timothy Large/mid-cap 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 Timothy Large/mid-cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Timothy Large/mid-cap has no effect on the direction of Ford i.e., Ford and Timothy Large/mid-cap go up and down completely randomly.

Pair Corralation between Ford and Timothy Large/mid-cap

Taking into account the 90-day investment horizon Ford is expected to generate 13.1 times less return on investment than Timothy Large/mid-cap. In addition to that, Ford is 2.39 times more volatile than Timothy Largemid Cap Value. It trades about 0.0 of its total potential returns per unit of risk. Timothy Largemid Cap Value is currently generating about 0.03 per unit of volatility. If you would invest  1,391  in Timothy Largemid Cap Value on December 4, 2024 and sell it today you would earn a total of  169.00  from holding Timothy Largemid Cap Value or generate 12.15% return on investment over 90 days.

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

Ford Motor  vs.  Timothy Largemid Cap Value

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.

Timothy Large/mid-cap

Risk-Adjusted Performance

Very Weak

Over the last 90 days Timothy Largemid Cap Value has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's fundamental indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Ford and Timothy Large/mid-cap

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

The idea behind Ford Motor and Timothy Largemid Cap Value 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.

Check out your portfolio center.

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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.