Correlation Between Ford and Dreyfus Municipalome

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

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

Diversification Opportunities for Ford and Dreyfus Municipalome

-0.61

Correlation Coefficient

Ford  Dreyfus Municipalome

Excellent diversification

The 3 months correlation between Ford and Dreyfus is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Dreyfus Municipalome in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dreyfus Municipalome 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 Dreyfus Municipalome. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dreyfus Municipalome has no effect on the direction of Ford i.e., Ford and Dreyfus Municipalome go up and down completely randomly.

Pair Corralation between Ford and Dreyfus Municipalome

Taking into account the 90-day investment horizon Ford Motor is expected to generate 4.41 times more return on investment than Dreyfus Municipalome. However, Ford is 4.41 times more volatile than Dreyfus Municipalome. It trades about 0.03 of its potential returns per unit of risk. Dreyfus Municipalome is currently generating about -0.12 per unit of risk. If you would invest  971.00  in Ford Motor on December 27, 2024 and sell it today you would earn a total of  19.00  from holding Ford Motor or generate 1.96% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.36%
Values	Daily Returns

Ford Motor  vs.  Dreyfus Municipalome

Ford Motor

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ford Motor are ranked lower than 2 (%) 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 current stock price disturbance, may contribute to mid-run losses for the stockholders.

Dreyfus Municipalome

Risk-Adjusted Performance

Very Weak

Over the last 90 days Dreyfus Municipalome has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Dreyfus Municipalome is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Ford and Dreyfus Municipalome

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

The idea behind Ford Motor and Dreyfus Municipalome 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.