Correlation Between Ford and Millenium Hotels

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

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

Diversification Opportunities for Ford and Millenium Hotels

0.14

Correlation Coefficient

Ford  Millenium Hotels

Average diversification

The 3 months correlation between Ford and Millenium is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Millenium Hotels Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Millenium Hotels Real 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 Millenium Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Millenium Hotels Real has no effect on the direction of Ford i.e., Ford and Millenium Hotels go up and down completely randomly.

Pair Corralation between Ford and Millenium Hotels

Taking into account the 90-day investment horizon Ford is expected to generate 1.6 times less return on investment than Millenium Hotels. But when comparing it to its historical volatility, Ford Motor is 1.79 times less risky than Millenium Hotels. It trades about 0.0 of its potential returns per unit of risk. Millenium Hotels Real is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  360.00  in Millenium Hotels Real on October 26, 2024 and sell it today you would lose (94.00) from holding Millenium Hotels Real or give up 26.11% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	94.33%
Values	Daily Returns

Ford Motor  vs.  Millenium Hotels Real

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.

Millenium Hotels Real

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Millenium Hotels Real are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy primary indicators, Millenium Hotels is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Ford and Millenium Hotels

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

The idea behind Ford Motor and Millenium Hotels Real 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.