Correlation Between Ford and Arbutus Biopharma

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

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

Diversification Opportunities for Ford and Arbutus Biopharma

-0.44

Correlation Coefficient

Ford  Arbutus Biopharma

Very good diversification

The 3 months correlation between Ford and Arbutus is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Arbutus Biopharma Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arbutus Biopharma Corp 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 Arbutus Biopharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arbutus Biopharma Corp has no effect on the direction of Ford i.e., Ford and Arbutus Biopharma go up and down completely randomly.

Pair Corralation between Ford and Arbutus Biopharma

Taking into account the 90-day investment horizon Ford is expected to generate 5.39 times less return on investment than Arbutus Biopharma. But when comparing it to its historical volatility, Ford Motor is 1.15 times less risky than Arbutus Biopharma. It trades about 0.02 of its potential returns per unit of risk. Arbutus Biopharma Corp is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  205.00  in Arbutus Biopharma Corp on September 4, 2024 and sell it today you would earn a total of  141.00  from holding Arbutus Biopharma Corp or generate 68.78% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.6%
Values	Daily Returns

Ford Motor  vs.  Arbutus Biopharma Corp

Ford Motor

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ford Motor are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, Ford is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Arbutus Biopharma Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Arbutus Biopharma Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Ford and Arbutus Biopharma

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

The idea behind Ford Motor and Arbutus Biopharma Corp 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.

Check out your portfolio center.

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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.