Correlation Between Ford and NV Bekaert

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

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

Diversification Opportunities for Ford and NV Bekaert

0.01

Correlation Coefficient

Ford  NV Bekaert

Significant diversification

The 3 months correlation between Ford and BEKAY is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and NV Bekaert SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NV Bekaert SA 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 NV Bekaert. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NV Bekaert SA has no effect on the direction of Ford i.e., Ford and NV Bekaert go up and down completely randomly.

Pair Corralation between Ford and NV Bekaert

Taking into account the 90-day investment horizon Ford Motor is expected to generate 0.9 times more return on investment than NV Bekaert. However, Ford Motor is 1.11 times less risky than NV Bekaert. It trades about -0.21 of its potential returns per unit of risk. NV Bekaert SA is currently generating about -0.21 per unit of risk. If you would invest  1,073  in Ford Motor on September 21, 2024 and sell it today you would lose (85.00) from holding Ford Motor or give up 7.92% of portfolio value over 90 days.

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

Ford Motor  vs.  NV Bekaert SA

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.

NV Bekaert SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NV Bekaert SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Ford and NV Bekaert

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

The idea behind Ford Motor and NV Bekaert SA 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.