Correlation Between Ford and Juva Life

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

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

Diversification Opportunities for Ford and Juva Life

-0.32

Correlation Coefficient

Ford  Juva Life

Very good diversification

The 3 months correlation between Ford and Juva is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Juva Life in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Juva Life 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 Juva Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Juva Life has no effect on the direction of Ford i.e., Ford and Juva Life go up and down completely randomly.

Pair Corralation between Ford and Juva Life

Taking into account the 90-day investment horizon Ford is expected to generate 2833.35 times less return on investment than Juva Life. But when comparing it to its historical volatility, Ford Motor is 69.94 times less risky than Juva Life. It trades about 0.0 of its potential returns per unit of risk. Juva Life is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  4.20  in Juva Life on September 12, 2024 and sell it today you would lose (4.20) from holding Juva Life or give up 100.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.4%
Values	Daily Returns

Ford Motor  vs.  Juva Life

Ford Motor

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ford Motor are ranked lower than 1 (%) 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.

Juva Life

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Juva Life are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Juva Life reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ford and Juva Life

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

The idea behind Ford Motor and Juva Life 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.