Correlation Between Superior Industries and Ford

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

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

Diversification Opportunities for Superior Industries and Ford

0.85

Correlation Coefficient

Superior Industries  Ford

Very poor diversification

The 3 months correlation between Superior and Ford is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Superior Industries Internatio and Ford Motor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ford Motor and Superior Industries 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 Superior Industries International 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 Superior Industries i.e., Superior Industries and Ford go up and down completely randomly.

Pair Corralation between Superior Industries and Ford

Considering the 90-day investment horizon Superior Industries International is expected to under-perform the Ford. In addition to that, Superior Industries is 1.94 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 -0.09 per unit of volatility. If you would invest  1,063  in Ford Motor on December 1, 2024 and sell it today you would lose (108.00) from holding Ford Motor or give up 10.16% of portfolio value over 90 days.

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

Superior Industries Internatio  vs.  Ford Motor

Superior Industries

Risk-Adjusted Performance

Very Weak

Over the last 90 days Superior Industries International has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unfluctuating performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Ford Motor

Risk-Adjusted Performance

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.

Pair Trading with Superior Industries and Ford

The main advantage of trading using opposite Superior Industries and Ford positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Superior Industries 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 Superior Industries International 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.