Correlation Between Ford and Ebusco Holding

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

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

Diversification Opportunities for Ford and Ebusco Holding

-0.4

Correlation Coefficient

Ford  Ebusco Holding

Very good diversification

The 3 months correlation between Ford and Ebusco is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Ebusco Holding BV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ebusco Holding BV 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 Ebusco Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ebusco Holding BV has no effect on the direction of Ford i.e., Ford and Ebusco Holding go up and down completely randomly.

Pair Corralation between Ford and Ebusco Holding

Taking into account the 90-day investment horizon Ford Motor is expected to generate 0.34 times more return on investment than Ebusco Holding. However, Ford Motor is 2.96 times less risky than Ebusco Holding. It trades about 0.0 of its potential returns per unit of risk. Ebusco Holding BV is currently generating about -0.09 per unit of risk. If you would invest  1,090  in Ford Motor on September 19, 2024 and sell it today you would lose (91.00) from holding Ford Motor or give up 8.35% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.34%
Values	Daily Returns

Ford Motor  vs.  Ebusco Holding BV

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.

Ebusco Holding BV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ebusco Holding BV has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Ford and Ebusco Holding

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

The idea behind Ford Motor and Ebusco Holding BV 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.