Correlation Between Ford and Triton International

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

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

Diversification Opportunities for Ford and Triton International

0.85

Correlation Coefficient

Ford  Triton International

Very poor diversification

The 3 months correlation between Ford and Triton is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Triton International Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Triton International 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 Triton International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Triton International has no effect on the direction of Ford i.e., Ford and Triton International go up and down completely randomly.

Pair Corralation between Ford and Triton International

Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the Triton International. In addition to that, Ford is 4.1 times more volatile than Triton International Limited. It trades about -0.1 of its total potential returns per unit of risk. Triton International Limited is currently generating about 0.04 per unit of volatility. If you would invest  1,961  in Triton International Limited on December 4, 2024 and sell it today you would earn a total of  8.00  from holding Triton International Limited or generate 0.41% return on investment over 90 days.

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

Ford Motor  vs.  Triton International Limited

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 latest unfluctuating performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Triton International

Risk-Adjusted Performance

Very Weak

Over the last 90 days Triton International Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Preferred Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Ford and Triton International

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

The idea behind Ford Motor and Triton International Limited 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.