Correlation Between Ford and 09261XAB8

Can any of the company-specific risk be diversified away by investing in both Ford and 09261XAB8 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 09261XAB8 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Ford Motor and BXSL 275 16 SEP 26, you can compare the effects of market volatilities on Ford and 09261XAB8 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 09261XAB8. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and 09261XAB8.

Diversification Opportunities for Ford and 09261XAB8

-0.37

Correlation Coefficient

Ford  09261XAB8

Very good diversification

The 3 months correlation between Ford and 09261XAB8 is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and BXSL 275 16 SEP 26 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BXSL 275 16 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 09261XAB8. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BXSL 275 16 has no effect on the direction of Ford i.e., Ford and 09261XAB8 go up and down completely randomly.

Pair Corralation between Ford and 09261XAB8

Taking into account the 90-day investment horizon Ford Motor is expected to generate 3.88 times more return on investment than 09261XAB8. However, Ford is 3.88 times more volatile than BXSL 275 16 SEP 26. It trades about 0.02 of its potential returns per unit of risk. BXSL 275 16 SEP 26 is currently generating about -0.1 per unit of risk. If you would invest  957.00  in Ford Motor on December 30, 2024 and sell it today you would earn a total of  15.00  from holding Ford Motor or generate 1.57% return on investment over 90 days.

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

Ford Motor  vs.  BXSL 275 16 SEP 26

Ford Motor

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ford Motor are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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.

BXSL 275 16

Risk-Adjusted Performance

Very Weak

Over the last 90 days BXSL 275 16 SEP 26 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 09261XAB8 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 09261XAB8

The main advantage of trading using opposite Ford and 09261XAB8 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, 09261XAB8 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 09261XAB8 will offset losses from the drop in 09261XAB8's long position.

The idea behind Ford Motor and BXSL 275 16 SEP 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 Global Correlations module to find global opportunities by holding instruments from different markets.