Correlation Between Ford and Turism Felix

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

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

Diversification Opportunities for Ford and Turism Felix

0.19

Correlation Coefficient

Ford  Turism Felix

Average diversification

The 3 months correlation between Ford and Turism is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Turism Felix B in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Turism Felix B 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 Turism Felix. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Turism Felix B has no effect on the direction of Ford i.e., Ford and Turism Felix go up and down completely randomly.

Pair Corralation between Ford and Turism Felix

Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the Turism Felix. But the stock apears to be less risky and, when comparing its historical volatility, Ford Motor is 3.43 times less risky than Turism Felix. The stock trades about -0.36 of its potential returns per unit of risk. The Turism Felix B is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest  33.00  in Turism Felix B on September 28, 2024 and sell it today you would lose (3.00) from holding Turism Felix B or give up 9.09% of portfolio value over 90 days.

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

Ford Motor  vs.  Turism Felix B

Ford Motor

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ford Motor has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Turism Felix B

Risk-Adjusted Performance

1 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Turism Felix B are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Turism Felix is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Ford and Turism Felix

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

The idea behind Ford Motor and Turism Felix B 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..