Correlation Between Ford and 018581AL2

Can any of the company-specific risk be diversified away by investing in both Ford and 018581AL2 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 018581AL2 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Ford Motor and BFH 7 15 JAN 26, you can compare the effects of market volatilities on Ford and 018581AL2 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 018581AL2. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and 018581AL2.

Diversification Opportunities for Ford and 018581AL2

0.15

Correlation Coefficient

Ford  018581AL2

Average diversification

The 3 months correlation between Ford and 018581AL2 is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and BFH 7 15 JAN 26 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 018581AL2 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 018581AL2. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 018581AL2 has no effect on the direction of Ford i.e., Ford and 018581AL2 go up and down completely randomly.

Pair Corralation between Ford and 018581AL2

Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the 018581AL2. In addition to that, Ford is 3.15 times more volatile than BFH 7 15 JAN 26. It trades about -0.23 of its total potential returns per unit of risk. BFH 7 15 JAN 26 is currently generating about 0.16 per unit of volatility. If you would invest  9,980  in BFH 7 15 JAN 26 on September 22, 2024 and sell it today you would earn a total of  44.00  from holding BFH 7 15 JAN 26 or generate 0.44% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	23.81%
Values	Daily Returns

Ford Motor  vs.  BFH 7 15 JAN 26

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 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.

018581AL2

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in BFH 7 15 JAN 26 are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, 018581AL2 is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Ford and 018581AL2

The main advantage of trading using opposite Ford and 018581AL2 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, 018581AL2 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 018581AL2 will offset losses from the drop in 018581AL2's long position.

The idea behind Ford Motor and BFH 7 15 JAN 26 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.