Correlation Between Ford and Boiron SA

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

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

Diversification Opportunities for Ford and Boiron SA

-0.44

Correlation Coefficient

Ford  Boiron SA

Very good diversification

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

Pair Corralation between Ford and Boiron SA

Taking into account the 90-day investment horizon Ford Motor is expected to generate 0.87 times more return on investment than Boiron SA. However, Ford Motor is 1.15 times less risky than Boiron SA. It trades about 0.22 of its potential returns per unit of risk. Boiron SA is currently generating about -0.28 per unit of risk. If you would invest  1,022  in Ford Motor on September 3, 2024 and sell it today you would earn a total of  91.00  from holding Ford Motor or generate 8.9% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.24%
Values	Daily Returns

Ford Motor  vs.  Boiron SA

Ford Motor

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ford Motor are ranked lower than 2 (%) 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 latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Boiron SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Boiron SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Ford and Boiron SA

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

The idea behind Ford Motor and Boiron 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.