Correlation Between Ford and Yamaha

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Ford and Yamaha 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 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, you can compare the effects of market volatilities on Ford and Yamaha 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. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Yamaha.

Diversification Opportunities for Ford and Yamaha

FordYamahaDiversified AwayFordYamahaDiversified Away100%
-0.35
  Correlation Coefficient

Very good diversification

The 3 months correlation between Ford and Yamaha is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Yamaha in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yamaha 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. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yamaha has no effect on the direction of Ford i.e., Ford and Yamaha go up and down completely randomly.

Pair Corralation between Ford and Yamaha

Taking into account the 90-day investment horizon Ford Motor is expected to generate 0.75 times more return on investment than Yamaha. However, Ford Motor is 1.34 times less risky than Yamaha. It trades about -0.01 of its potential returns per unit of risk. Yamaha is currently generating about -0.06 per unit of risk. If you would invest  1,066  in Ford Motor on September 15, 2024 and sell it today you would lose (27.00) from holding Ford Motor or give up 2.53% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy98.46%
ValuesDaily Returns

Ford Motor  vs.  Yamaha

 Performance 
JavaScript chart by amCharts 3.21.15OctNov -15-10-50510
JavaScript chart by amCharts 3.21.15F YHA
       Timeline  
Ford Motor 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Ford Motor has generated negative risk-adjusted returns adding no value to investors with long positions. 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.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec1010.210.410.610.81111.211.411.6
Yamaha 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Yamaha has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec6.66.877.27.47.67.88

Ford and Yamaha Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-6.25-4.68-3.11-1.54-0.02611.533.114.696.277.85 0.020.040.060.080.10
JavaScript chart by amCharts 3.21.15F YHA
       Returns  

Pair Trading with Ford and Yamaha

The main advantage of trading using opposite Ford and Yamaha positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Yamaha 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 will offset losses from the drop in Yamaha's long position.
The idea behind Ford Motor and Yamaha 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.

Other Complementary Tools

Funds Screener
Find actively-traded funds from around the world traded on over 30 global exchanges
Equity Forecasting
Use basic forecasting models to generate price predictions and determine price momentum
Risk-Return Analysis
View associations between returns expected from investment and the risk you assume
Headlines Timeline
Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity
Portfolio Manager
State of the art Portfolio Manager to monitor and improve performance of your invested capital