Correlation Between Ford and YAMAHA CORP

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

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

Diversification Opportunities for Ford and YAMAHA CORP

-0.13

Correlation Coefficient

Ford  YAMAHA CORP

Good diversification

The 3 months correlation between Ford and YAMAHA is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and YAMAHA P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on YAMAHA CORP 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 YAMAHA CORP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of YAMAHA CORP has no effect on the direction of Ford i.e., Ford and YAMAHA CORP go up and down completely randomly.

Pair Corralation between Ford and YAMAHA CORP

Taking into account the 90-day investment horizon Ford is expected to generate 1.88 times less return on investment than YAMAHA CORP. In addition to that, Ford is 1.28 times more volatile than YAMAHA P. It trades about 0.06 of its total potential returns per unit of risk. YAMAHA P is currently generating about 0.13 per unit of volatility. If you would invest  653.00  in YAMAHA P on December 19, 2024 and sell it today you would earn a total of  80.00  from holding YAMAHA P or generate 12.25% 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.  YAMAHA P

Ford Motor

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ford Motor are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating technical and fundamental indicators, Ford may actually be approaching a critical reversion point that can send shares even higher in April 2025.

YAMAHA CORP

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in YAMAHA P are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, YAMAHA CORP exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ford and YAMAHA CORP

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

The idea behind Ford Motor and YAMAHA P 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.