Correlation Between Ford and TD Active

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

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

Diversification Opportunities for Ford and TD Active

0.0

Correlation Coefficient

Ford  TD Active

Pay attention - limited upside

The 3 months correlation between Ford and TPRF is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and TD Active Preferred in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TD Active Preferred 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 TD Active. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TD Active Preferred has no effect on the direction of Ford i.e., Ford and TD Active go up and down completely randomly.

Pair Corralation between Ford and TD Active

Taking into account the 90-day investment horizon Ford is expected to generate 1.58 times less return on investment than TD Active. In addition to that, Ford is 5.63 times more volatile than TD Active Preferred. It trades about 0.03 of its total potential returns per unit of risk. TD Active Preferred is currently generating about 0.23 per unit of volatility. If you would invest  869.00  in TD Active Preferred on September 3, 2024 and sell it today you would earn a total of  225.00  from holding TD Active Preferred or generate 25.89% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Ford Motor  vs.  TD Active Preferred

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 latest stock price disturbance, may contribute to mid-run losses for the stockholders.

TD Active Preferred

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in TD Active Preferred are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, TD Active is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Ford and TD Active

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

The idea behind Ford Motor and TD Active Preferred 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.