Correlation Between Ford and Maritime Resources

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

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

Diversification Opportunities for Ford and Maritime Resources

0.23

Correlation Coefficient

Ford  Maritime Resources

Modest diversification

The 3 months correlation between Ford and Maritime is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Maritime Resources Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Maritime Resources Corp 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 Maritime Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Maritime Resources Corp has no effect on the direction of Ford i.e., Ford and Maritime Resources go up and down completely randomly.

Pair Corralation between Ford and Maritime Resources

Taking into account the 90-day investment horizon Ford is expected to generate 68.38 times less return on investment than Maritime Resources. But when comparing it to its historical volatility, Ford Motor is 10.95 times less risky than Maritime Resources. It trades about 0.02 of its potential returns per unit of risk. Maritime Resources Corp is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  3.50  in Maritime Resources Corp on September 12, 2024 and sell it today you would earn a total of  0.50  from holding Maritime Resources Corp or generate 14.29% 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.  Maritime Resources Corp

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.

Maritime Resources Corp

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Maritime Resources Corp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile primary indicators, Maritime Resources reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ford and Maritime Resources

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

The idea behind Ford Motor and Maritime Resources Corp 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.