Correlation Between Ford and DEAP CAPITAL

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

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

Diversification Opportunities for Ford and DEAP CAPITAL

-0.09

Correlation Coefficient

Ford  DEAP CAPITAL

Good diversification

The 3 months correlation between Ford and DEAP is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and DEAP CAPITAL MANAGEMENT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DEAP CAPITAL MANAGEMENT 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 DEAP CAPITAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DEAP CAPITAL MANAGEMENT has no effect on the direction of Ford i.e., Ford and DEAP CAPITAL go up and down completely randomly.

Pair Corralation between Ford and DEAP CAPITAL

Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the DEAP CAPITAL. But the stock apears to be less risky and, when comparing its historical volatility, Ford Motor is 2.83 times less risky than DEAP CAPITAL. The stock trades about -0.18 of its potential returns per unit of risk. The DEAP CAPITAL MANAGEMENT is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  120.00  in DEAP CAPITAL MANAGEMENT on September 13, 2024 and sell it today you would lose (6.00) from holding DEAP CAPITAL MANAGEMENT or give up 5.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Ford Motor  vs.  DEAP CAPITAL MANAGEMENT

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 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.

DEAP CAPITAL MANAGEMENT

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in DEAP CAPITAL MANAGEMENT are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain basic indicators, DEAP CAPITAL reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ford and DEAP CAPITAL

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

The idea behind Ford Motor and DEAP CAPITAL MANAGEMENT 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.