Correlation Between Ford and Synergie

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

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

Diversification Opportunities for Ford and Synergie

-0.46

Correlation Coefficient

Ford  Synergie

Very good diversification

The 3 months correlation between Ford and Synergie is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Synergie SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Synergie SE 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 Synergie. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Synergie SE has no effect on the direction of Ford i.e., Ford and Synergie go up and down completely randomly.

Pair Corralation between Ford and Synergie

Taking into account the 90-day investment horizon Ford Motor is expected to generate 0.99 times more return on investment than Synergie. However, Ford Motor is 1.01 times less risky than Synergie. It trades about -0.01 of its potential returns per unit of risk. Synergie SE is currently generating about -0.07 per unit of risk. If you would invest  1,066  in Ford Motor on September 14, 2024 and sell it today you would lose (27.00) from holding Ford Motor or give up 2.53% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.46%
Values	Daily Returns

Ford Motor  vs.  Synergie SE

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.

Synergie SE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Synergie SE has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Ford and Synergie

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

The idea behind Ford Motor and Synergie SE 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.