Correlation Between QVCC and Ford

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

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

Diversification Opportunities for QVCC and Ford

-0.15

Correlation Coefficient

QVCC  Ford

Good diversification

The 3 months correlation between QVCC and Ford is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding QVCC and Ford Motor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ford Motor and QVCC 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 QVCC are associated (or correlated) with Ford. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ford Motor has no effect on the direction of QVCC i.e., QVCC and Ford go up and down completely randomly.

Pair Corralation between QVCC and Ford

Given the investment horizon of 90 days QVCC is expected to under-perform the Ford. In addition to that, QVCC is 1.82 times more volatile than Ford Motor. It trades about -0.12 of its total potential returns per unit of risk. Ford Motor is currently generating about -0.16 per unit of volatility. If you would invest  2,411  in Ford Motor on September 2, 2024 and sell it today you would lose (50.00) from holding Ford Motor or give up 2.07% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

QVCC  vs.  Ford Motor

QVCC

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in QVCC are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, QVCC is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

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. In spite of rather sound basic indicators, Ford is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with QVCC and Ford

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

The idea behind QVCC and Ford Motor 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.