Correlation Between Ford and MASSIN

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

By analyzing existing cross correlation between Ford Motor and MASSIN 3067 01 APR 52, you can compare the effects of market volatilities on Ford and MASSIN 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 MASSIN. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and MASSIN.

Diversification Opportunities for Ford and MASSIN

0.01

Correlation Coefficient

Ford  MASSIN

Significant diversification

The 3 months correlation between Ford and MASSIN is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and MASSIN 3067 01 APR 52 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MASSIN 3067 01 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 MASSIN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MASSIN 3067 01 has no effect on the direction of Ford i.e., Ford and MASSIN go up and down completely randomly.

Pair Corralation between Ford and MASSIN

Taking into account the 90-day investment horizon Ford is expected to generate 1.62 times less return on investment than MASSIN. But when comparing it to its historical volatility, Ford Motor is 1.45 times less risky than MASSIN. It trades about 0.01 of its potential returns per unit of risk. MASSIN 3067 01 APR 52 is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  7,530  in MASSIN 3067 01 APR 52 on September 24, 2024 and sell it today you would lose (193.00) from holding MASSIN 3067 01 APR 52 or give up 2.56% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	45.67%
Values	Daily Returns

Ford Motor  vs.  MASSIN 3067 01 APR 52

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.

MASSIN 3067 01

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MASSIN 3067 01 APR 52 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, MASSIN 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 MASSIN

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

The idea behind Ford Motor and MASSIN 3067 01 APR 52 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.

Check out your portfolio center.

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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.