Correlation Between Ford and ENELIM

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

By analyzing existing cross correlation between Ford Motor and ENELIM 225 12 JUL 31, you can compare the effects of market volatilities on Ford and ENELIM 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 ENELIM. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and ENELIM.

Diversification Opportunities for Ford and ENELIM

0.09

Correlation Coefficient

Ford  ENELIM

Significant diversification

The 3 months correlation between Ford and ENELIM is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and ENELIM 225 12 JUL 31 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ENELIM 225 12 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 ENELIM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ENELIM 225 12 has no effect on the direction of Ford i.e., Ford and ENELIM go up and down completely randomly.

Pair Corralation between Ford and ENELIM

Taking into account the 90-day investment horizon Ford is expected to generate 15.6 times less return on investment than ENELIM. But when comparing it to its historical volatility, Ford Motor is 1.4 times less risky than ENELIM. It trades about 0.0 of its potential returns per unit of risk. ENELIM 225 12 JUL 31 is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  7,509  in ENELIM 225 12 JUL 31 on September 12, 2024 and sell it today you would earn a total of  357.00  from holding ENELIM 225 12 JUL 31 or generate 4.75% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	67.19%
Values	Daily Returns

Ford Motor  vs.  ENELIM 225 12 JUL 31

Ford Motor

Risk-Adjusted Performance

0 of 100

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.

ENELIM 225 12

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ENELIM 225 12 JUL 31 are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady basic indicators, ENELIM may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Ford and ENELIM

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

The idea behind Ford Motor and ENELIM 225 12 JUL 31 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .