Correlation Between Ford and Brunello Cucinelli

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Can any of the company-specific risk be diversified away by investing in both Ford and Brunello Cucinelli 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 Brunello Cucinelli into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Brunello Cucinelli SpA, you can compare the effects of market volatilities on Ford and Brunello Cucinelli 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 Brunello Cucinelli. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Brunello Cucinelli.

Diversification Opportunities for Ford and Brunello Cucinelli

-0.51
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Ford and Brunello is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Brunello Cucinelli SpA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brunello Cucinelli SpA 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 Brunello Cucinelli. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brunello Cucinelli SpA has no effect on the direction of Ford i.e., Ford and Brunello Cucinelli go up and down completely randomly.

Pair Corralation between Ford and Brunello Cucinelli

Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the Brunello Cucinelli. But the stock apears to be less risky and, when comparing its historical volatility, Ford Motor is 1.7 times less risky than Brunello Cucinelli. The stock trades about -0.39 of its potential returns per unit of risk. The Brunello Cucinelli SpA is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest  8,810  in Brunello Cucinelli SpA on September 23, 2024 and sell it today you would earn a total of  1,520  from holding Brunello Cucinelli SpA or generate 17.25% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy95.45%
ValuesDaily Returns

Ford Motor  vs.  Brunello Cucinelli SpA

 Performance 
       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 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.
Brunello Cucinelli SpA 

Risk-Adjusted Performance

12 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Brunello Cucinelli SpA are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Brunello Cucinelli reported solid returns over the last few months and may actually be approaching a breakup point.

Ford and Brunello Cucinelli Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Ford and Brunello Cucinelli

The main advantage of trading using opposite Ford and Brunello Cucinelli positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Brunello Cucinelli 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 Brunello Cucinelli will offset losses from the drop in Brunello Cucinelli's long position.
The idea behind Ford Motor and Brunello Cucinelli SpA 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.

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