Correlation Between Ford and 26442EAG5

Can any of the company-specific risk be diversified away by investing in both Ford and 26442EAG5 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 26442EAG5 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Ford Motor and DUKE ENERGY OHIO, you can compare the effects of market volatilities on Ford and 26442EAG5 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 26442EAG5. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and 26442EAG5.

Diversification Opportunities for Ford and 26442EAG5

0.36

Correlation Coefficient

Ford  26442EAG5

Weak diversification

The 3 months correlation between Ford and 26442EAG5 is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and DUKE ENERGY OHIO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DUKE ENERGY OHIO 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 26442EAG5. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DUKE ENERGY OHIO has no effect on the direction of Ford i.e., Ford and 26442EAG5 go up and down completely randomly.

Pair Corralation between Ford and 26442EAG5

Taking into account the 90-day investment horizon Ford is expected to generate 3088.08 times less return on investment than 26442EAG5. But when comparing it to its historical volatility, Ford Motor is 41.5 times less risky than 26442EAG5. It trades about 0.0 of its potential returns per unit of risk. DUKE ENERGY OHIO is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  8,778  in DUKE ENERGY OHIO on October 25, 2024 and sell it today you would lose (116.00) from holding DUKE ENERGY OHIO or give up 1.32% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	73.89%
Values	Daily Returns

Ford Motor  vs.  DUKE ENERGY OHIO

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.

DUKE ENERGY OHIO

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in DUKE ENERGY OHIO are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, 26442EAG5 may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Ford and 26442EAG5

The main advantage of trading using opposite Ford and 26442EAG5 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, 26442EAG5 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 26442EAG5 will offset losses from the drop in 26442EAG5's long position.

The idea behind Ford Motor and DUKE ENERGY OHIO 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..