Correlation Between Ford and Us Core

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

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

Diversification Opportunities for Ford and Us Core

0.61

Correlation Coefficient

Ford  Us Core

Poor diversification

The 3 months correlation between Ford and DFQTX is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Us E Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Us E Equity 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 Us Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Us E Equity has no effect on the direction of Ford i.e., Ford and Us Core go up and down completely randomly.

Pair Corralation between Ford and Us Core

Taking into account the 90-day investment horizon Ford is expected to generate 2.45 times less return on investment than Us Core. In addition to that, Ford is 2.65 times more volatile than Us E Equity. It trades about 0.03 of its total potential returns per unit of risk. Us E Equity is currently generating about 0.21 per unit of volatility. If you would invest  3,681  in Us E Equity on September 1, 2024 and sell it today you would earn a total of  380.00  from holding Us E Equity or generate 10.32% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

Ford Motor  vs.  Us E Equity

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 recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Us E Equity

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Us E Equity are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Us Core may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Ford and Us Core

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

The idea behind Ford Motor and Us E Equity 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.