Correlation Between Ford and Erech Finance

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

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

Diversification Opportunities for Ford and Erech Finance

0.08

Correlation Coefficient

Ford  Erech Finance

Significant diversification

The 3 months correlation between Ford and Erech is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Erech Finance Cahalacha in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Erech Finance Cahalacha 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 Erech Finance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Erech Finance Cahalacha has no effect on the direction of Ford i.e., Ford and Erech Finance go up and down completely randomly.

Pair Corralation between Ford and Erech Finance

Taking into account the 90-day investment horizon Ford Motor is expected to generate 0.35 times more return on investment than Erech Finance. However, Ford Motor is 2.88 times less risky than Erech Finance. It trades about -0.02 of its potential returns per unit of risk. Erech Finance Cahalacha is currently generating about -0.02 per unit of risk. If you would invest  1,042  in Ford Motor on September 28, 2024 and sell it today you would lose (38.00) from holding Ford Motor or give up 3.65% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	73.02%
Values	Daily Returns

Ford Motor  vs.  Erech Finance Cahalacha

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.

Erech Finance Cahalacha

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Erech Finance Cahalacha has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Ford and Erech Finance

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

The idea behind Ford Motor and Erech Finance Cahalacha 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.