Correlation Between Controladora Vuela and Ford

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

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

Diversification Opportunities for Controladora Vuela and Ford

0.08

Correlation Coefficient

Controladora Vuela  Ford

Significant diversification

The 3 months correlation between Controladora and Ford is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Controladora Vuela Compaa and Ford Motor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ford Motor and Controladora Vuela 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 Controladora Vuela Compaa 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 Controladora Vuela i.e., Controladora Vuela and Ford go up and down completely randomly.

Pair Corralation between Controladora Vuela and Ford

Assuming the 90 days trading horizon Controladora Vuela Compaa is expected to under-perform the Ford. In addition to that, Controladora Vuela is 1.18 times more volatile than Ford Motor. It trades about -0.17 of its total potential returns per unit of risk. Ford Motor is currently generating about 0.01 per unit of volatility. If you would invest  20,006  in Ford Motor on December 30, 2024 and sell it today you would lose (178.00) from holding Ford Motor or give up 0.89% of portfolio value over 90 days.

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

Controladora Vuela Compaa  vs.  Ford Motor

Controladora Vuela Compaa

Risk-Adjusted Performance

Very Weak

Over the last 90 days Controladora Vuela Compaa has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's essential indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company 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. In spite of fairly strong primary indicators, Ford is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Controladora Vuela and Ford

The main advantage of trading using opposite Controladora Vuela and Ford positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Controladora Vuela 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 Controladora Vuela Compaa 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.