Correlation Between Ford and ClearVue Technologies

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

Diversification Opportunities for Ford and ClearVue Technologies

-0.18
  Correlation Coefficient

Good diversification

The 3 months correlation between Ford and ClearVue is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and ClearVue Technologies Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ClearVue Technologies 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 ClearVue Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ClearVue Technologies has no effect on the direction of Ford i.e., Ford and ClearVue Technologies go up and down completely randomly.

Pair Corralation between Ford and ClearVue Technologies

Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the ClearVue Technologies. But the stock apears to be less risky and, when comparing its historical volatility, Ford Motor is 13.5 times less risky than ClearVue Technologies. The stock trades about -0.2 of its potential returns per unit of risk. The ClearVue Technologies Limited is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  20.00  in ClearVue Technologies Limited on September 10, 2024 and sell it today you would lose (2.00) from holding ClearVue Technologies Limited or give up 10.0% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy95.24%
ValuesDaily Returns

Ford Motor  vs.  ClearVue Technologies Limited

 Performance 
       Timeline  
Ford Motor 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Very 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 recent stock price disturbance, may contribute to mid-run losses for the stockholders.
ClearVue Technologies 

Risk-Adjusted Performance

9 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in ClearVue Technologies Limited are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical and fundamental indicators, ClearVue Technologies reported solid returns over the last few months and may actually be approaching a breakup point.

Ford and ClearVue Technologies Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Ford and ClearVue Technologies

The main advantage of trading using opposite Ford and ClearVue Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, ClearVue Technologies 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 ClearVue Technologies will offset losses from the drop in ClearVue Technologies' long position.
The idea behind Ford Motor and ClearVue Technologies Limited 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.

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