Correlation Between Ford and Emilia Devel

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

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

Diversification Opportunities for Ford and Emilia Devel

0.0

Correlation Coefficient

Ford  Emilia Devel

Pay attention - limited upside

The 3 months correlation between Ford and Emilia is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Emilia Devel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emilia Devel 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 Emilia Devel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emilia Devel has no effect on the direction of Ford i.e., Ford and Emilia Devel go up and down completely randomly.

Pair Corralation between Ford and Emilia Devel

Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the Emilia Devel. But the stock apears to be less risky and, when comparing its historical volatility, Ford Motor is 1.06 times less risky than Emilia Devel. The stock trades about -0.01 of its potential returns per unit of risk. The Emilia Devel is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest  201,900  in Emilia Devel on September 16, 2024 and sell it today you would earn a total of  62,500  from holding Emilia Devel or generate 30.96% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	72.31%
Values	Daily Returns

Ford Motor  vs.  Emilia Devel

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.

Emilia Devel

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Emilia Devel are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Emilia Devel sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ford and Emilia Devel

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

The idea behind Ford Motor and Emilia Devel 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.