Correlation Between Ford and Emira Property

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

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

Diversification Opportunities for Ford and Emira Property

0.33

Correlation Coefficient

Ford  Emira Property

Weak diversification

The 3 months correlation between Ford and Emira is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Emira Property in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emira Property 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 Emira Property. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emira Property has no effect on the direction of Ford i.e., Ford and Emira Property go up and down completely randomly.

Pair Corralation between Ford and Emira Property

Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the Emira Property. In addition to that, Ford is 1.22 times more volatile than Emira Property. It trades about -0.01 of its total potential returns per unit of risk. Emira Property is currently generating about 0.09 per unit of volatility. If you would invest  94,500  in Emira Property on September 1, 2024 and sell it today you would earn a total of  22,600  from holding Emira Property or generate 23.92% return on investment over 90 days.

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

Ford Motor  vs.  Emira Property

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.

Emira Property

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Emira Property are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Emira Property may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Ford and Emira Property

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

The idea behind Ford Motor and Emira Property 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.

Check out your portfolio center.

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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.