Correlation Between Ford and V-Mart Retail

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

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

Diversification Opportunities for Ford and V-Mart Retail

-0.38

Correlation Coefficient

Ford  V-Mart Retail

Very good diversification

The 3 months correlation between Ford and V-Mart is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and V Mart Retail Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on V Mart Retail 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 V-Mart Retail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of V Mart Retail has no effect on the direction of Ford i.e., Ford and V-Mart Retail go up and down completely randomly.

Pair Corralation between Ford and V-Mart Retail

Taking into account the 90-day investment horizon Ford Motor is expected to generate 0.81 times more return on investment than V-Mart Retail. However, Ford Motor is 1.23 times less risky than V-Mart Retail. It trades about 0.02 of its potential returns per unit of risk. V Mart Retail Limited is currently generating about -0.17 per unit of risk. If you would invest  957.00  in Ford Motor on December 28, 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	98.39%
Values	Daily Returns

Ford Motor  vs.  V Mart Retail Limited

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.

V Mart Retail

Risk-Adjusted Performance

Very Weak

Over the last 90 days V Mart Retail Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Ford and V-Mart Retail

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

The idea behind Ford Motor and V Mart Retail Limited 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.