Correlation Between Ford and PHENIXFIN

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

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

Diversification Opportunities for Ford and PHENIXFIN

-0.21

Correlation Coefficient

Ford  PHENIXFIN

Very good diversification

The 3 months correlation between Ford and PHENIXFIN is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and PHENIXFIN P DL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PHENIXFIN P DL 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 PHENIXFIN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PHENIXFIN P DL has no effect on the direction of Ford i.e., Ford and PHENIXFIN go up and down completely randomly.

Pair Corralation between Ford and PHENIXFIN

Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the PHENIXFIN. In addition to that, Ford is 1.4 times more volatile than PHENIXFIN P DL. It trades about -0.02 of its total potential returns per unit of risk. PHENIXFIN P DL is currently generating about 0.19 per unit of volatility. If you would invest  4,100  in PHENIXFIN P DL on September 29, 2024 and sell it today you would earn a total of  700.00  from holding PHENIXFIN P DL or generate 17.07% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Ford Motor  vs.  PHENIXFIN P DL

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.

PHENIXFIN P DL

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in PHENIXFIN P DL are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, PHENIXFIN reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ford and PHENIXFIN

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

The idea behind Ford Motor and PHENIXFIN P DL 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 Transaction History module to view history of all your transactions and understand their impact on performance.