Correlation Between Ford and USA Performance

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

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

Diversification Opportunities for Ford and USA Performance

0.0

Correlation Coefficient

Ford  USA Performance

Pay attention - limited upside

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

Pair Corralation between Ford and USA Performance

If you would invest  0.02  in USA Performance Products on September 23, 2024 and sell it today you would earn a total of  0.00  from holding USA Performance Products or generate 0.0% return on investment over 90 days.

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

Ford Motor  vs.  USA Performance Products

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 latest unfluctuating performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

USA Performance Products

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days USA Performance Products has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, USA Performance is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Ford and USA Performance

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

The idea behind Ford Motor and USA Performance Products 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.