Correlation Between Ford and Americafirst Tactical

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

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

Diversification Opportunities for Ford and Americafirst Tactical

0.2

Correlation Coefficient

Ford  Americafirst Tactical

Modest diversification

The 3 months correlation between Ford and Americafirst is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Americafirst Tactical Alpha in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Americafirst Tactical 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 Americafirst Tactical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Americafirst Tactical has no effect on the direction of Ford i.e., Ford and Americafirst Tactical go up and down completely randomly.

Pair Corralation between Ford and Americafirst Tactical

Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the Americafirst Tactical. In addition to that, Ford is 1.57 times more volatile than Americafirst Tactical Alpha. It trades about -0.05 of its total potential returns per unit of risk. Americafirst Tactical Alpha is currently generating about 0.11 per unit of volatility. If you would invest  1,629  in Americafirst Tactical Alpha on September 23, 2024 and sell it today you would earn a total of  151.00  from holding Americafirst Tactical Alpha or generate 9.27% return on investment over 90 days.

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

Ford Motor  vs.  Americafirst Tactical Alpha

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.

Americafirst Tactical

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Americafirst Tactical Alpha are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Americafirst Tactical may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Ford and Americafirst Tactical

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

The idea behind Ford Motor and Americafirst Tactical Alpha 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.